I was traveling for work since March 09.  Eight days without hearing, reading, writing or saying the word "bitcoin".  Logged back in today March/17 at about 14:00 UTC.  I see that the price hasn't changed much, has it? 

Indeed you are right, there is no USD or CNY in the "bitcoin system", so there is no sense saying that money is going into or out of it. I should have said instead that, in my opinion, more and more Chinese traders must be selling their holdings for whatever others want to pay, and dropping out. 

I am aware of this thread about the state of the MtGOX bankruptcy, there may be other threads here or in other forums.  However, there is not much more information in that thread than what is available at the former MtGOX site, now controlled by the trustee.

Most documents in that site are in Japanese, but they generally include a good (non-official) English translation.  Just keep scrolling the PDF file.

The trustee will get a fat paycheck and will spend a few million on consultants and other services, but most of the 200'000 BTC and cash will be distributed.

Indeed it is not known yet how the claims will be computed, nor who will be allowed to claim.  It is very likely that claimants will have to fully identify themselves; if nothing else, to exclude the former management and relatives, and perhaps users connected to fraudulent trading, if any are identified.  

It is also not known yet whether the BTC can be returned as BTC, or whether they will have to be auctioned and all payments will have to be in JPY.  The trustee seems willing to return the BTC, and, if that is possible, Kraken will probably handle the distribution; but the Court will have to approve the refund plan, and the law may not allow BTC payments.  In any case, the trustee has until September 2015 to validate all the claims, so the distribution cannot begin until then.  If the Court and trustee opt for an auction, it could occur before that date, though.

Is there a relation between exchange volume and the amount of money coming into the system (or being drained from it)?  Volume is generally up when the price is changing, up or down; and that may be cause and effect at the same time.  But figuring ot the net input money flow seems to be a complicated computation at least...

I would think that, in China, money is steadily leaving the system: Chinese traders seem to be gradually selling and taking their cash out of the exchanges.  This feeling is not based on the exchange volumes, but simply becuse of the decay of the China bubble (which seems to be too fast to be due to miner dumping alone).   The rest of the world should still be a net buyer, but there is no data, really, and apparently it can barely absorb what the Chinese and the miners are selling.

 

On that score he wins, alas. 

 

Well, for one thing, I looked into alchemy too.  I even have my own theory about the Emerald Tablet. 

Cryptocoin News is totally wrong on that one.

61.9 million dollars is the total money spent by the hapless folks who bought shares of SM BIT since Sep/2013.  Those shares are now worth 34.9 million dollars, because the nominal value of the share is defined as the market price of 0.1 BTC.  On the average, the people holding those shares lost ~45% of their money so far.

If they had bought bitcoins directly, instead of BIT shares, those investors would be slightly better of today, because of fees that the SMBIT managers charge.  However, if they had bought real BTC, they could have spent or sold them when the price was higher.  Since they bought BIT shares instead, they had first to wait for six months before being allowed to pull out, and then were told to wait for an indefinite time while SM sought the OTCQX listing.   

So, those 61.9 million  did not come from Wall Street, but from Fools Street. 

Last news I read (someone correct me if no longer true) he was charged with negotiating with the Canadian Hells Angels the murder of that "friendlychemist", described in the emails as a chemist living in Vancouver with wife and kids.  The trial, AFAIK, is still scheduled to be held in Maryland for later this year.

In most places of the planet, hiring a killer is a serious crime, almost as bad as trying to kill someone with one's own hands (or worse, because some excuses like legitimate defense, rage, or lack of intent to kill cannot be used).  It does not matter whether the victim died or the killer actually did try to kill him.

Sure, we do not know whether the "friendly chemist" those emails were about was actually killed, or even whether he and the "Hells Angels"  were real or just FBI agents.  But, if Ross did write those emails, none of that matters.  Whether somebody died or not, it would not change his standing (legally or morally) in the least.

He hasn't been convicted yet.  What it the point you are trying to make?

There is no evidence for those claims.

The first 30'000 were snapped by Tim Draper who said he intended to "provide liquidity" for Vaurum, an enterprise he had invested in.  Both on that and the next auction, SecondMarket formed syndicates of small bidders who could not afford to bid for a whole 2000 lot; and such bidders grabbed 48'000 of the 50'000 coins. The other 2000 coins were bought by Tim Draper again, this time to fuel his son's Boost incubator.

SecondMarket bid on their own this time, not for the fund but for their OTC trading desk.

"Provide (BTC) liquidity for" some market means "sell those BTC to clients of that market as soon as the bids get a little above their buying price".

OTC markets and the open markets on the exchanges are all connected by brokers-arbitragers-marketmakers.  Dumping 50'000 coins on the OTC market has the same final effect as dumping on the exchanges, only that the damage will happen gradually over weeks or months, rather than all of a sudden.

According to the FBI, there are emails in his laptop where Ross offers to pay the Hells Angels in Canada for the murder of a supplier who was threatening to denounce Ross if he did not help the supplier to recover a large sum that another SilkRoad client was owing him (which he in turn owed to the Hells Angels, it seems).  It is not known whether the supplier was actually killed.  Some of those emails were published as evidence in the drug trafficking trial.  That was not the only case of Ross trying to hire a murder, IIRC. 

The trial in Maryland was supposed to look at the murder-hiring charges specifically.  Has it been called off?

The Ptolemaic model was actually a great achievement, compared to the previous mathematical models that relied on carriages racing across the sky, pulled by flying horses.

For a sample of the latter, check the /Book of Enoch/, which was once part of the Hebrew Bible but was dropped from it some 2000 or more years ago.  (It was thought to have been lost, until scholars in the 1700s learned that it was still part of the Ethopian Christian Bible.)  It includes an interesting explanation of why the Sun traces different paths on the sky at different times of the year.  (That may have been one of the reasons for its exclusion.)

The Ptolemaic system is no more primitive than models that people build today for all sorts of phenomena, consisting of simple functions -- like straight lines, exponentials, polynomials, Fourier series, splines, sigmoids -- that have no justification in terms of nature of the phenomenon, but are just convenient to compute.  The astronomers in Ptolemy's time did not have analytic geometry nor algebra, so they used geometric constructions (the rotating spheres within spheres) in their place. 

In particular, the popular analysis of bitcoin price, that fits a straight line in log scale, is "crudely Ptolemaic" in this sense, because there is no reason, economic or other, to think that the price would evolve in that way.  I would dare say that my "bubble model" is at least Copernican (who explained the complicated paths of planets relative to the Earth as the difference of simpler paths of the planet and the Earth around the sun).  Maybe even a bit Newtonian... 

He was charged with the alleged attempts to hire the murder of several people in a separate criminal case in Maryland, to be tried later this year IIRC.  Were those charges withdrawn?

A good summary of my position, yes.  


I was careful to say descriptive in the title precisely because I don't think that it is of much help in predicting the future.   I don't believe that any analysis of the price chart will let one predict if and when there will be another large bubble that will compensate for the drop from 1200.

The model does give some hints about the future, though.  For example, it says that the general downtrend since the 2013-11-29 peak can be entirely attributed to deflation of the single bubble BJ0 that created the 2013-11 rally.  The other features of the price chart since then can be explained as sudden "markets" that quickly bought some large number of coins and then dumped them entirely -- sometimes right away, sometimes after holding them for a few months.

That analysis would then imply that the deflation of the main Chinese bubble BJ0 still can drag the price down by another 100$ over the next year. Unless more "markets" open up, of course -- like the US market that is hoped to open up if/when COIN is approved and/or GBTC starts trading.

However, even that limited prediction is uncertain because the state of previous bubbles is not observable at present.  Take the magenta bubble at the center of the plot, for example, that took the price from a low of ~5$ in 2012-04 to ~12$ in 2012-09.  According to that model, without that bubble the price would have continued dropping, becoming ~2$ on 2012-09, and the magenta bubble added ~10$ to the price.  But it is nearly impossible to tell what happened to that "magenta market" after 2013-01, when the "Shanghai" bubble SH1 started to dominate and took the price to ~120$.

I got a better fit assuming that the magenta bubble started to decline in 2013-01, but that may be just noise, or an artifact of the nonlinear relation between demand and price.  It may be that the magenta "market" remained stable or even continued to grow up to the present, in which case the shape and magnitude of the following "bubbles" would have to be adjusted by 10$ or more.

EDIT: clarified that, without he magenta bubble, the price would have been ~2$ in 2012-09. It would have fallen further afterwards.

This is what I understood that "redemption" meant, except that I was assuming it would happen by decision of the share holder (possibly restricted to the primary broker or whatever) rather than by choice of the fund's manager.

So you expect that the fund will not be required to redeem, unless all holders vote to close the fund (as you explained in the preceding post)?

A multiple-bubble descriptive model of bitcoin price
Preliminary version


[ click on the graph for a full-size version. ]

This plot show a model (green irregular line) for the historic series of daily BTC prices (gray irregular line) as the sum of "simple bubbles".  The reddish-brown line at value about 1 is the ratio of the model and the actual price.

In each "simple bubble", the price grows exponentially with some rate r1 until a maximum value P at some date d1, then stays constant until some date d2, then decays with some rate r2.  In most bubbles the dates d1 and d2 are equal, so there is no flat part between the exponential rise and the exponential decay.

The model is the sum of several of those "simple bubbles", each with its own parameters r1,d1,P,d2,r2. They are the triangular or trapezoidal lines in the plot.

Although each "simple bubble" mathematically extends infinitely in the past and in the future,  it is relevant only for some limited interval of dates that includes d1 and d2.  Outside that interval, it is too small compared to the sum of the other bubbles, and it could even be assumed to be zero, without a perceptible change in the model.

I believe that each "simple bubble" in this model, or set of consecutive bubbles, corresponds to the opening of some market, distinguished by geography, national borders, application, community, etc.  For example, the two "simple bubbles" labeled "SH1" and "SH2" are probably due to surges of demand in China created by BTC-China in Shanghai.  The four "simple bubbles" labeled "BJ0" to "BJ4" are almost certainly due to the adoption of bitcoin by the amateur commodity speculators in Mainland China, especially via OKCoin and Huobi in Beijing.   Bubble "BJ0" models the basic demand of that market, while bubbles "BJ2" to "BJ4" model the extra demand that was turned on and off by the PBoC rumors and anti-rumors in early 2014.

The "simple bubble" model does not try to reproduce the oscillations of the price that occur at the end of a sharp rise.

The parameter P of each bubble represents its contribution to the price between d1 and d2.  It is not proportional to the demand of BTC by the corresponding market, because the effect on price of a given demand depends on the amount of BTC available for trading, and that amount must have been decreasing as the price increased.

In the log plot, the exponential rise and fall of each bubble, plotted by itself, are straight diagonal lines; the rates r1 and r2 define their slopes. When the bubbles are added together, however, the rise and fall get distorted, and appear curved in the plot.

The raw prices (gray line) are the weighted mean prices in each UTC day.  These raw prices and the simple bubbles were smoothed with a 15-day Hann window.

Thanks for the link!

Actually I am surprised that my estimated total investment (~67.8 M$) was so close. 

The graph (magenta line) was computed by adding the estimated net USD investment on each date.  They do not give that data direcly. User @jl2012 estimated the net amount of BTC bought on each date, by the method described on page 1 of this thread. I estimated the net USD investment by multiplying that amount by the NAV on the same date.  Both estimates surely included some error.  All those errors added to about 5900 $, it seems.

Since the net assets are worth ~34 M$, the average investor still has a paper loss, but somewhat smaller than I had estimated: -45% instead of -50%.

IIRC, Silbert is no longer CEO of SecondMarket, but remains at the head of SM's BIT fund (or of whatever SM division/subsidiary that "owns" that fund).