Merged Bitcoin - Part 3

[Samson]

Alternatively you could put your money where your mouth and execute a trade if the algorithm is *that* good.

I mean it's highly likely that something as volatile as Bitcoin will trade at a price lower than 27837 at some point in the future but then again it's likely that it'll trade higher than 27837 at some point in the future as well.


edited to add....

Oh look, it's currently at 27861 so if you'd have claimed that the algorithm said the price would be going up, you'd have been right.

8 years back:
I was at pains to point out that ratio of out of money to in money satisfies the Turing test.
Let us see.

 

[jeremyp]

I just txtd a callow youth who follows crypto and energies etc on a simulator, suggesting sell crypto on the completion of my algorithm pattern.
Bitcoin is around 27837 so let us see what portends.
Essentially this is a time stamped trade.
May the force be with us.

It’s just below 28k as I write this. What timescale are you assigning to this prediction?

 

[Samson]

Alternatively you could put your money where your mouth and execute a trade if the algorithm is *that* good.

I mean it's highly likely that something as volatile as Bitcoin will trade at a price lower than 27837 at some point in the future but then again it's likely that it'll trade higher than 27837 at some point in the future as well.


edited to add....

Oh look, it's currently at 27861 so if you'd have claimed that the algorithm said the price would be going up, you'd have been right.

It’s just below 28k as I write this. What timescale are you assigning to this prediction?

Gimme a price or gimme a time.
Please not both.

 

[The Don]

Gimme a price or gimme a time.
Please not both.

If I had a Technical Analysis means of gaining a reliable edge over the market I'd:

• Keep very quiet about it
• Use it to make enough money that nobody I care about ever has any money worries whatsoever
• Ensure that good causes that I like are well provided for financially

I wouldn't waste my time making vague predictions on an obscure message board.

 

[The Don]

8 years back:
I was at pains to point out that ratio of out of money to in money satisfies the Turing test.
Let us see.

What is the "Turing test" in this context ?

Making vague predictions about the price of volatile things doesn't seem like much of a superpower to me

 

[Chanakya]

I just txtd a callow youth who follows crypto and energies etc on a simulator, suggesting sell crypto on the completion of my algorithm pattern.
Bitcoin is around 27837 so let us see what portends.
Essentially this is a time stamped trade.
May the force be with us.

Well if something can be shown to work then there can be no arguing with that. That goes for anything and everything, including astrology and reading tea leaves.

But pending that all-important evidence, one might ask just how exactly it might work, right? TA assumes that trading patterns repeat themselves. How and why on earth can that possibly happen? (Except, conceivably, as some kind of self-fulfilling prophesy, that I suppose might be a possbility. But bar that, I mean to say?)

Seriously, how would you explain how the thing might work? Why would trading patterns repeat themselves, why on earth? (Apart from, like I said, maybe conceivably the self-fulfilling prophesy thing, where because everyone believes it'll go up, therefore they buy, therefore it goes up; and likewise down.)

 

[Samson]

What is the "Turing test" in this context ?

Making vague predictions about the price of volatile things doesn't seem like much of a superpower to me

Well if something can be shown to work then there can be no arguing with that. That goes for anything and everything, including astrology and reading tea leaves.

But pending that all-important evidence, one might ask just how exactly it might work, right? TA assumes that trading patterns repeat themselves. How and why on earth can that possibly happen? (Except, conceivably, as some kind of self-fulfilling prophesy, that I suppose might be a possbility. But bar that, I mean to say?)

Seriously, how would you explain how the thing might work? Why would trading patterns repeat themselves, why on earth? (Apart from, like I said, maybe conceivably the self-fulfilling prophesy thing, where because everyone believes it'll go up, therefore they buy, therefore it goes up; and likewise down.)

Argument from incredulity.
I know normally rational people who disprove the big bang with similar words.

 

[wareyin]

Argument from incredulity.
I know normally rational people who disprove the big bang with similar words.

A request for an explanation is not an argument from incredulity.

But saying it is, without providing the explanation is not even an argument, it's a dodge.

 

[Chanakya]

Argument from incredulity.
I know normally rational people who disprove the big bang with similar words.

Mine was a question, not an argument.

Of course, the question can be bypassed by presenting hard evidence. Like QM makes no sense, yet we accept it's true, because the evidence is incontrovertible. The BB as well, agreed. So that's one way to go, sure.

But bar that, pending that, my question --- question, not argument --- is, Why would trading patterns repeat themselves (except by happenstance, and conceivably as self-fulfilling prophesy(?

 

[jeremyp]

Gimme a price or gimme a time.
Please not both.

Sorry. If you are going to make a prediction, it has to be specific and have a time scale attached to it, otherwise it's worthless. I'm not just talking about financial predictions here but predictions of all kinds.

 

[Samson]

Sorry. If you are going to make a prediction, it has to be specific and have a time scale attached to it, otherwise it's worthless. I'm not just talking about financial predictions here but predictions of all kinds.

I consider it is what happens between the prediction and the outcome that counts. Often a prediction in markets is correct eventually, but the drawdown on margin calls forces taking a loss before the profit is seen.
In this case, I was advising to add to a position, not where or when to take profit. If the advice was followed, the drawdown was $169 US and the market, to date, has traveled $1294 US into the money.

 

[The Don]

Mine was a question, not an argument.

Of course, the question can be bypassed by presenting hard evidence. Like QM makes no sense, yet we accept it's true, because the evidence is incontrovertible. The BB as well, agreed. So that's one way to go, sure.

But bar that, pending that, my question --- question, not argument --- is, Why would trading patterns repeat themselves (except by happenstance, and conceivably as self-fulfilling prophesy(?

On one level it kinda makes sense. After a period of price rises there is typically a correction as traders engage in profit taking. After a period of price falls there is typically a correction as traders close out their positions (if they're long) or take their profits (if they're short).

The thing is that it doesn't always happen and it's impossible to say when the current run has ended. A 10% price rise/fall could signal the start of correction/consolidation period or it could be the catalyst for everyone else to pile in.

Likewise with TA involving metrics other than price. In a rational market, a stock price trading outside "normal" price to earnings ratios would be the signal to take corrective action. The thing is that markets aren't rational.

In any case, a working TA model which is actually used to trigger trades would immediately invalidate itself if it's used to any real extent.

IMO the benchmark for any TA claims is how much money has the person made using it and over what period of time. If there's a track record for consistent returns over an extended period of time (years, ideally decades) in excess of market indices then there may be something of interest. Anything else is just aimless jibber-jabber.

 

[Suddenly]

Seriously, how would you explain how the thing might work? Why would trading patterns repeat themselves, why on earth? (Apart from, like I said, maybe conceivably the self-fulfilling prophesy thing, where because everyone believes it'll go up, therefore they buy, therefore it goes up; and likewise down.)

It works in sports betting. Sports bettors have created some pretty clear patterns based on mass psychology / conventional wisdom which causes bookies to set inaccurate lines to balance the books. Those edges tend to correct themselves pretty quickly because getting enough money down to exploit an inaccurate line eventually moves the line.

Financial markets are more complex and have (to put it mildly) more sophisticated bettors so probably it isn't possible to exploit because like The Don suggests the variance would make it very hard to distinguish between luck and skill. It would be like trying to count cards at blackjack with money that randomly changes in value. Just a nightmare to filter the noise.

Plus the edges probably wouldn't justify the overhead and opportunity costs.

 

[psionl0]

It works in sports betting.

I am having trouble seeing how this is so.

The more money that is wagered on a specific sporting outcome, the shorter the odds become on that outcome. Ultimately, the expected return on all outcomes should be about the same (efficient betting hypothesis?) since favourites attract more bets and long shots attract fewer bets.

People who get in early on a bet may be able to get better odds than later bettors just as people who get in early on a new stock/commodity may get a better price than later investors. OTOH those early adopters may lose their shirt if their expectation that this is the next big thing doesn't pan out. Similarly, early bettors may end up with worser odds than later bettors if new information comes to light.

 

[The Don]

With sports betting IMO it makes some sense. I'm sure that there are occasions where the odds on the home team or popular player are shorter than they should be because of mug punters placing emotional bets. Of course once this is spotted then the "smart" money comes in and removes the potential for arbitrage.

That same emotional money is also in the stock market but it may be more difficult to spot and unlike a sporting fixture on a particular date, there's no certainty about when the reversion to true value may occur - if ever.

 

[Suddenly]

I am having trouble seeing how this is so.

The more money that is wagered on a specific sporting outcome, the shorter the odds become on that outcome. Ultimately, the expected return on all outcomes should be about the same (efficient betting hypothesis?) since favourites attract more bets and long shots attract fewer bets.

People who get in early on a bet may be able to get better odds than later bettors just as people who get in early on a new stock/commodity may get a better price than later investors. OTOH those early adopters may lose their shirt if their expectation that this is the next big thing doesn't pan out. Similarly, early bettors may end up with worser odds than later bettors if new information comes to light.

It's a massively inefficient market. It used to be worse. There often isn't enough smart money to counteract the dumb money because there are so many ways to make bets.

A lot of this isn't betting on the outcome of a game. It's betting on things like point totals for Sun Belt conference football games based on forecasted barometric pressure.

 

[Checkmite]

The larger failure of the analogy of sports betting is that in sports there is a disposition. You place a bet on the outcome of a game or whatever - at some point that game actually happens, a final outcome is solidly determined, and you find out at that point whether your bet won or lost, and you either collect your winnings or wave goodbye at your buy-in accordingly.

When it comes to Bitcoin and other cryptocurrencies, there is no disposition. You ARE betting on an outcome - specifically, the advertised outcome that Bitcoin will become mass-adopted as a functional currency that the global economy moves to in part or entirely, leaving you as an early adopter in an overwhelmingly advantageous and/or predatory position versus the rest of the public that starts having to buy and use Bitcoin only when forced to and is therefore "late".

14 years later it's fairly clear that's never going to happen in reality. Bitcoin's expensive fees and extended wait times for transactions to complete mean it is unusable for day to day commerce; you wouldn't go to McDonald's and pay for a Big Mac with Bitcoin, or go to the gas station and buy ten bucks worth of gas or pay a $35 water bill even if the system for doing so existed because it would be a stupid and impractical waste of money and in some cases time.

But this is a reality that the internal crypto world can't ever admit to itself, because if nobody's going to be forced to buy and use Bitcoin ten years from now, then it has no inherent value and there's no reason for you to buy and hoard it now. This is why a whole cinematic crypto universe exists now - an endless parade of other crypto-currencies and blockchain products like extremely crappy games and NFTs and "investment projects" that never come to anything objectively resembling fruition, all based on the exact same pitch that you should buy into them right now because the entire world is going to imminently going to start using them; these things had to be invented, and will need to continue to be invented forever because there's nothing else to actually spend cryptocurrency on.

What if you could open up betting on the final score of a baseball game, and keep accepting bets all the way up until the end of the game - but also, you can keep adding innings to the end of the game indefinitely so it never ends and you can just keep taking bets? The answer to that question is cryptocurrency.

 

[psionl0]

14 years later it's fairly clear that's never going to happen in reality. Bitcoin's expensive fees and extended wait times for transactions to complete mean it is unusable for day to day commerce; you wouldn't go to McDonald's and pay for a Big Mac with Bitcoin, or go to the gas station and buy ten bucks worth of gas or pay a $35 water bill even if the system for doing so existed because it would be a stupid and impractical waste of money and in some cases time.

Yes, it is impractical to use cryptos like bitcoin to pay for over the counter purchases since a merchant is unlikely to accept payment with 0 confirmations. But paying bills is a different proposition. Then it doesn't matter if it takes an hour or two for the necessary number of confirmations to occur.

But this is a reality that the internal crypto world can't ever admit to itself, because if nobody's going to be forced to buy and use Bitcoin ten years from now, then it has no inherent value and there's no reason for you to buy and hoard it now. This is why a whole cinematic crypto universe exists now - an endless parade of other crypto-currencies and blockchain products like extremely crappy games and NFTs and "investment projects" that never come to anything objectively resembling fruition, all based on the exact same pitch that you should buy into them right now because the entire world is going to imminently going to start using them; these things had to be invented, and will need to continue to be invented forever because there's nothing else to actually spend cryptocurrency on.

This is just pure CT. Bitcoin's price success ensures that there will be a raft of copy cat cryptos - most of which never amount to anything. Nobody is under any sort of pressure to "invest" in these copy cat cryptos.

Ditto for the derivatives such as NFTs etc. If there is a possible way to make money out of something then somebody will try it. That doesn't mean that they will be created forever and lose every time "because there's nothing else to actually spend cryptocurrency on". That is just plain ridiculous.

 

[Checkmite]

Yes, it is impractical to use cryptos like bitcoin to pay for over the counter purchases since a merchant is unlikely to accept payment with 0 confirmations. But paying bills is a different proposition. Then it doesn't matter if it takes an hour or two for the necessary number of confirmations to occur.

The problem isn't JUST the wait times. There's a very simple and practical reason no utility company is offering a Bitcoin payment option.

This is just pure CT. Bitcoin's price success ensures that there will be a raft of copy cat cryptos - most of which never amount to anything. Nobody is under any sort of pressure to "invest" in these copy cat cryptos.

What do you mean, "nobody is under any pressure" to buy into other cryptocurrencies? Up until the most recent crash, crypto was being advertised everywhere, heavily and constantly. Billboards. Superbowl commercials. The internet is still full of people smugly insisting that the failure of Silicon Valley Bank is proof that crypto is a superior and safer alternative to real money and banks as if FTX hadn't just collapsed three months ago.

 

[psionl0]

The problem isn't JUST the wait times.

Well wait times was the only thing you mentioned. Sure, utility companies are unlikely to accept payment from a volatile asset like crypto but you were totally silent on this aspect.

What do you mean, "nobody is under any pressure" to buy into other cryptocurrencies?

Just that. Are you being pressured to buy cryptos? Or are you just hearing some people extolling their benefits? And why isn't all of the negative commentary about cryptos "pressuring" hodlers to dump their holdings?