Here is my prediction for the coming month:



The plot shows the Bitstamp prices from Nov/2013 to Jan/2014 (purple) and estimated lower and upper bounds for Feb/2014 (green).  I claim that, in any 1-hour interval in the coming month, the Bitstamp price will be within the two green lines above, with 95% probability.

For example, I claim that on Feb/22 the price will be between 300 USD and 2200 USD with 95% probability.

(Note that this is not the same thing as saying that the entire price plot will stay in that region for the whole month with 95% probability.)

This prediction is based on the simple "log Brownian" model that I described a while ago.  Namely, it assumes that the price change from one 1-hour interval to the next, in log scale, is a normal random variable that is independent of the previous history. 

More precisely let P(i) be the weighted mean transaction price in the 1-hourinterval number i.  Let Z(i) be log_10(P(i)). The model assumes that

  Z(i+1) = Z(i) + C*RAND(i)

where the factors RAND(i) are independent random variabls with zero mean, unit deviation, and Gaussian distribution.  Therefore, for any n > 0,

  Z(i+n) = Z(i) + C*sqrt(n)*RAND(i,n)

where factors RAND(i,n) are again random (but not independent) variables with zero mean, unit deviation, and Gaussian distribution.

Analysis of the Bitstamp prices from Sep/2013 to Jan/2014 yields 0.00964 as the best fit for the parameter C.

Since 95% of the probability of the Gaussian distribution is within 2 deviations of the mean, the model implies that, n steps in the future,
the value Z(i+n) will be within the values

  Zmin(i,n) = Z(i) - 2*C*sqrt(n) and
  Zmax(i,n) = Z(i) + 2*C*sqrt(n)

with 95% probability, where Z(i) is the current (last known) price.  The green lines are these two bounds, converted back to linear scale (Pmin(i,n) = 10**Zmin(i,n), etc.)

More specifically, according to the model, at any specific 1-hour interval i+n in the future, the log price Z(i+n) will be

   below Zmin(i,n) with 2.5% probability;
   between Zmin(i,n) and the current price Z(i) with 47.5% probability;
   between the current price Z(i) and Zmax(i,n) with 47.5% probability;
   above Zmax(i,n) with 2.5% probability.

Note that, by this model, the future prices P(i+n) may be on either side of the current price (red line) with equal probability, even though the inverse log mapping yields a much wider range above than below.
 
Of course this model is quite rudimentary and basically useless for traders.  There may be more sophisticated models, but I doubt that they can yield better predictions. 

(The Brownian model is visibly inadequate for small n, since the log price increments from one interval to the next do not have a Gaussian distribution.  As a consequence, the 2*sigma interval Zmin(i,n) to Zmax(i,n) contains somewhat less than 95% of the probability.  However, by the Law of Large Numbers the distribution becomes almost Gaussian after a few hours. )

(before people ask: no, a model with a linear "historical trend" term Z(i+n) = Z(i) + T*n + C*sqrt(n)*RAND(i,n) does not seem appropriate, and its predictions for the next month would not be significantly different.)

As others have observed, that was not real trade. It was some robot, probably buggy, frantically selling to itself. It was turned off after 3 hours and ~40,000 BTC traded.

BTC-China should expunge that fake volume from its records.  If not, chart makers should do it.  In reality BTC-China is still quite dead.

Their bank must be closed for the New year holidays, so BTC-China should not have received any new money yet.

By the way, that market ranking site does not even list Huobi, which has the largest volume of them all (twice as much as OKCoin).

My paranoia sees an ongoing conspiracy to deny the very existence of Huobi and push customers towards BTC-China (and Mt.GOX).  She is wrong of course.

It already happened gradually over the last two months as payment processors and e-commerce sites cut their channels to the exchanges, ahead of the deadline.

All three exchanges are now working with withdrawals/deposits, in CNY only, to their corporate bank accounts; this arrangement is believed to be acceptable to the Government.  (BTC-China may also try to continue using their vouchers in a more limited fashion.)

So, the price will probably resume its normal behvior after the holidays -- that is, steady except for the usual level of unexpected rallies and crashes. 

Maybe something completely preposterous, there are always people who will believe even the most absurd and unbelievable claims. For example:

* Scientists discover that the "security" of SHA is entirely based on an unproven math conjecture.

* Operator of a major Bitcoin exchange  flees after stealing all his clients' bitcoins.

* Founding member of the Bitcoin Foundation is arrested, charged with using Bitcoin exchange for drug trafficking.

* Bitcoins are being stolen from accounts of major exchange https://bitcointalk.org/index.php?topic=324918.msg4840947#msg4840947

* FBI documents reveal that it has the means to trace bitcoin transactions and seize bitcoins without the owner's knowledge.

* Alternative cryptocoins appear, threaten to reduce demand for Bitcoin in the future.

* There are millions of hoarded Bitcoins that were bought for less than 10 US$ and may be dumped at any moment.

* Economist warns that Bitcoin's price will fall to less than 10 US$ as soon as the market realizes that it will fall to less than 10 US$.

* Media loses confidence in established Bitcoin leaders, turns to the Wall Observer thread for reliable market analysis.

Looking at the price charts one would think that MtGOX is very active.  However the Chartbuddy plots of its order book (the rightmost one in each pair),



show that nothing significant is happening there, for hours on end.  In those charts one can see that the "real" spread is usually large (10-20 USD).  However, there are some small transactions and orders bouncing up and down within the spread.  It is those transactions that make the MtGOX 1-minute price chart look like a broad hatched stripe. (In contrast, the Bitstamp 1-minute chart looks like a wriggly line.)

A plot of the ratio of prices MtGOX / Bitstamp since sep/2013:



The prices are weighted mean prices in each 1-hour interval, obtained from http://bitcoincharts.com/

The labels on the X-axis are approximate months of 2013; "13" is jan/2014.

But BTC-China will be competing with Huobi and OKCoin for the same market, won't they? 

I do not see why BTC-China would attarct new investors.  Do they have any advantage over the other two, e.g tariffs?

But the image that is being sold to the public is that one will be able to pay purchases in bitcoins by pointing one's smartphone at a QR code on the cashier's screen.  How could I do that without exposing my keys to a hacker attack?

Why would the bad guys use physical presence and physical force when they can remotely hack into my computer, install a virus that will steal my keys just when I try to use them, and have it send my bitcoins instead to a mixer in Timbuctu?

The police could perhaps save me from the wrench method.  Who is going to help me recover my hacked-off bitcoins?

The runaway robot at BTC-China has been turned off a few minuts ago.

The 1-minute chart is very interesting.

It all happened around 4:00 03:00 am local time, so perhaps it was a stupid programming mistake.  (Reminds me of the very first internet worm by Robert Morris. 8-)

EDIT: Spoke too soon.  The robot was briefly turned on again a couple of times. Now the charts are no longer updating.

                                             Ah.

Thanks!...

But look at the transaction log:


2014-01-30 16:34:06 | 4836.00 | 40.402
2014-01-30 16:33:57 | 4835.99 | 40.523
2014-01-30 16:33:49 | 4836.00 | 40.645
2014-01-30 16:33:40 | 4835.99 | 40.767
2014-01-30 16:33:30 | 4836.00 | 40.890
2014-01-30 16:33:21 | 4835.99 | 41.013
2014-01-30 16:33:12 | 4836.00 | 41.136
2014-01-30 16:33:02 | 4835.99 | 41.259
2014-01-30 16:32:53 | 4836.00 | 41.383
2014-01-30 16:32:44 | 4835.99 | 41.507
2014-01-30 16:32:34 | 4836.00 | 41.632
2014-01-30 16:32:24 | 4835.99 | 41.757
2014-01-30 16:32:15 | 4836.00 | 41.883
2014-01-30 16:32:06 | 4835.99 | 42.008
2014-01-30 16:31:56 | 4836.00 | 42.134
2014-01-30 16:31:47 | 4835.99 | 42.261
2014-01-30 16:31:45 | 4836.00 |  4.000
2014-01-30 16:31:38 | 4836.00 | 42.388
2014-01-30 16:31:29 | 4835.99 | 42.515
2014-01-30 16:31:19 | 4836.00 | 42.643
2014-01-30 16:31:10 | 4835.99 | 42.771
2014-01-30 16:31:00 | 4836.00 | 42.900
2014-01-30 16:30:52 | 4835.99 | 43.028
2014-01-30 16:30:43 | 4836.00 | 25.776


There is obviously a strongly negative feeling in this forum against Huobi and OKCoin, and very warm feelings about BTC-China. People keep claiming that Huobi's volume is fake (even though strong evidence of fakery has been shown only at other exchanges); and seem very happy that BTC-China is back in business (even though it will be just another Chinese-only(?) exchange).

May I ask why this bias? Personal reasons, or some technical features that I cannot see?

An interesting experiment, it shows that Huobi's market restores its equilibrium in ~10 minutes after a large out-of-ordinary disturbance.

But there may be also some delayed effect, the event apparently stirred the traders' anthill...

Other markets had similar spikes, but much smaller (~50-100 BTC instead of >500 BTC), more gradual, and slower-rising.  No echo at BTC-China..

I'm not sure that this is really great good news. 

As I understand it, last December Chinese banks were forbidden to deal in bitcoins themselves, and payment processors were told to stop making bitcoin-based payments and feeding bitcoin exchanges by jan/31.

BTC-China prudently stopped using banks and payment processors right away, and switched to "vouchers" (actually cryptographic keys) that one could buy through e-commerce sites like Taobao.  (Vouchers were not a sucess, the trade volume fell to less than 10%.) OKCoin continued using their corporate bank account for deposits and withdrawals.  Huobi first used the CEO's personal bank account but later switched to a corporate one.

I do not know whether the OKCoin/Huobi solution is acceptable to the government, or they will have to stop on jan/31.  But the market's behavior and BTC-China's decision seem to suggest that it will keep working for the time being.

On the other hand, selling vouchers through e-commerce sites effectively turns the latter into payment processors.  Chinese regulators are not so dumb that they could not see that.  Thus, it was no surprise that the main Chinese e-commerce site Alibaba/Taobao stopped selling BTC-China's vouchers by Jan/14 (ahead of the deadline).   WIth their presumed "safe" system cut off, I guess that BTC-China then decided to risk the OKCoin solution.

So, my conclusion is that it will be easier to move CNY in/out of BTC-China, but even harder to use USD or other currencies there.  BTC-China will now be able compete with Huobi and OKCoin in more even terms. The three of them will probably continue to operate normally beyond jan/31.

Good news for bulls, bad news for bears, I suppose.

Does this make sense?

Basically true.  One must distinguish "Investing and speculating in cryptocoins" and "the cryptocoin network".

The latter has the potential of actually creating new wealth by doing a useful service to society, namely allowing cheap international payments without direct bank intervention.  It is debatable how much that service will be worth (in concrete terms; say, how much more bread and wine the world will produce thanks to it).  It coud be a lot --- but certainly a lot less than what Bitcoin salesmen claim.

Investing and speculating in bitcoins does not create any wealth.  With a traditional corporation, the long-term investors are lending money to the company so that it can build the factories that will produce new wealth, and in return they will get a well-deserved fraction of that wealth. Short-term speculators, on the other hand, do not use their money to help the company, but only to suck money from other speculators or unwary novice investors.  (Some governments recognize that: Brazil, for one, has much higher revenue tax for day-trading profit than for long-term investment profit.)

Bitcoin trade is pure speculation, since none of the money that people spent buying bitcoins, from day zero, was loaned to the network to build its infrastructure or to pay his workers.  All the cash that successful bitcoin traders have pocketed came from the pockets of other traders.  All the wealth that bitcoin owners think they own is a slice of the world's future wealth, that they are not helping to create but still hope to grab if and when their bitcoins will be needed.


Actually, banks and many other entities create "money" of some sort, including cryptocoins.  Only productive work creates wealth.

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


               !    Mon !   Tue !   Wed !   Thu !    Fri !    Sat !    Sun !    Mon !    Tue !   Wed !                     
  EXCHANGE     !  01/20 ! 01/21 ! 01/22 ! 01/23 !  01/24 !  01/25 !  01/26 !  01/27 !  01/28 ! 01/29 ! Currencies considered

  Bitstamp     |   6.97 |  7.67 |  8.31 |  7.40 |  15.78 |   8.70 |   9.70 |  25.19 |  20.04 |  7.04 | USD                 
  BTC-e        |  10.29 |  5.67 | 22.32 |  8.53 |  15.27 |   9.34 |  10.38 |  21.02 |  16.82 |  6.53 | USD,EUR,RUR         
  MtGOX        |  12.10 |  7.25 |  5.51 |  2.23 |   7.38 |   9.52 |  16.11 |  10.02 |  11.82 |  7.21 | USD,EUR,GBP,AUD,JPY 
  BitFinEx     |   5.46 |  2.89 |  2.97 |  2.83 |  10.99 |   4.62 |   7.88 |  15.63 |  13.62 |  3.87 | USD                 
  Bitcoin.DE   |   0.39 |  0.45 |  0.69 |  0.42 |   0.52 |   0.30 |   0.34 |   0.60 |   0.49 |  0.33 | EUR                 
  Kraken       |   0.19 |  0.24 |  0.25 |  0.19 |   0.46 |   0.19 |   0.24 |   0.63 |   0.54 |  0.24 | EUR                 
  CaVirtEx     |   0.22 |  0.23 |  0.15 |  0.17 |   0.41 |   0.33 |   0.10 |   0.40 |   0.22 |  0.21 | CAD                 
  CampBX       |   0.10 |  0.09 |  0.05 |  0.08 |   0.13 |   0.04 |   0.05 |   0.13 |   0.20 |  0.07 | USD                 
  Crypto-Trade |   0.01 |  0.01 |   .   |  0.01 |   0.01 |    .   |    .   |    .   |   0.01 |   .   | USD                 

  SUBTOTAL     |  35.73 | 24.50 | 40.25 | 21.86 |  50.95 |  33.04 |  44.80 |  73.62 |  63.76 | 25.50 |                     

  Huobi        |  71.78 | 40.55 | 25.81 | 25.67 |  89.25 |  58.16 |  91.31 |  63.13 |  92.88 | 32.14 | CNY                 
  OKCoin       |  21.00 | 17.31 | 15.88 | 16.50 |  34.01 |  26.33 |  31.40 |  35.41 |  52.37 | 29.11 | CNY                 
  BTC-China    |   3.44 |  2.07 |  1.62 |  2.01 |   6.82 |   3.04 |   5.55 |   4.43 |   6.45 |  1.94 | CNY                 

  SUBTOTAL     |  96.22 | 59.93 | 43.31 | 44.18 | 130.08 |  87.53 | 128.26 | 102.97 | 151.70 | 63.19 |                     

  TOTAL        | 131.95 | 84.43 | 83.56 | 66.04 | 181.03 | 120.57 | 173.06 | 176.59 | 215.46 | 88.69 |                     



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. The BTC-e volumes now include retroactively also exchanges to EUR and RUR (together about 1 kBTC/day or less).  Trade between BTC and other cryptocoins, such as LiteCoin, is NOT included.

Coinbase volume is not available, neither at Bitcoinwisdom nor at Bitcoincharts, but they are said to use Bitstamp for currency conversion.

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".)

Unfortunately the chairman of a public hearing is not there to take a decision, he is just the show's host.  His mission is only to introduce the speakers and put them at ease.

The decisions, if any, will be taken by legislators and other government officials in coming months; and they will probably pay more attention to the opinion of bankers and other big investors, than to those given at the hearings...

Maybe it is yesterdays's dip that needs explaining... Was it Shrem's arrest, or the Russian news?

Sorry, is this a joke, or was user "loaded" really one of the people arrested?

I don't know in this case, but the result of a public hearing is usually just the transcripts/recordings of everything everybody said, without any conclusions or decisions.  

EDIT: I mean the official result.  The transcripts are usually published on some official government site.