I WAS going to write a post about KuCoin exchange but...
This started as a reply to a comment.
Then it got long. Then it got much longer. Then I typed so much good stuff that it became worth sharing more broadly. So now it's a post.
Her comment is long, feel free to read it if you like; but for the purpose of this post I have copied and pasted the important bits that I will address. As I am answering her comment it is typed to her. Anyone else is a stalker observing from the outside. 😄
Reply to TG's comment on my post of yesterday
Ah TG, you're going to give old Bit Brain grey hair! 👴(Or no hair at all.)
Let me address your comments individually:
I thought that was going to be a lot more brutal ! very disappointed
I'm not a monster you know! Only mildly evil. 👹
I think you're curve fitting. You are seeing the patterns that you want to see that don't exist. You are invested in it, so you are desperately looking for signs that you've made the right choices.
Put the horse before the cart? 😨 Me? Never!
I'm in crypto because of the curves I saw, not the other way round!
As for "fitting" the curves - well, yes. That's what I'm trying to do! Curves are a graphic representation of an mathematical equation. It's a lot easier to fit a curve to data then to calculate a formula. Curves are like scientific theories. Good theories should be able to explain all observed phenomena, they should make testable predictions about the future, they shouldn't contradict any basic proven facts and other people should be able to replicate the results using them. If new data is found that doesn't match the theory (or in this case, curve), then the theory should either be scrapped and start afresh, or more commonly, modified to account for the new data. (These are not my own words, I'm paraphrasing Stephen Hawking, but there is no way I'm going to be able to find that quote in one of his books within a reasonable amount of time!)
So I make my curves to fit the data. And my curves are good "theories" - they encompass all the old data and they make reliable predictions. They can also be tested by anyone. Crypto is still young and has therefore got a limited data set. I constantly fine tune my curves to make them fit just a little better. It doesn't make them wrong, indeed, it makes them more accurate. The basic curves that I show (the long-term trendlines) are the same ones I have been showing for months and are the same ones that got me into crypto in the first place.
They do exist. Make your own, you'll see. The data is all available. Crypto grows logarithmically. FACT. You can deny that, but you're denial will look a little silly when all the evidence is pointing to the contrary.
Where are all these bull runs that are heading to the moon that get predicted almost hourly ? (not by you personally I know)
I avoid the "Moon shot" predictions because they are so hard to call accurately. My prediction accuracy would be very low. I will predict this though: Moon shots will continue to happen. I just can't tell you when or where. I am invested in several low market cap coins which I consider to have a high "Mooning" potential, but I can't guarantee if or when it will happen to them.
The log thing makes me chuckle, I've never seen anyone else ever use it in trading. I wonder if you'd use it if it went the wrong way and didn't back up your claim ? Or is it just another curve fit that fits the narrative ?
A few questions in here. The log thing makes sense when you are dealing with logarithmic growth. It would never makes sense in a traditional market, the growth is not logarithmic. Crypto growth is logarithmic because it is a technology that is being adopted (as discussed in detail here). My post yesterday showed a log curve next to a normal one. The normal one is useless prior to mid 2017, that much is self-evident. But HUGE price actions did take place, as I showed in the individual examples. The only way to display that is on a log curve. You can see that right?
I'm not sure what you mean by "if it went the wrong way". If by that you mean the growth was not logarithmic, then it would make little difference: a log curve would show stunted peaks and exaggerated troughs, but the playing field would otherwise be level, so basic analysis would still be possible as long as you were not trying to, for example, equate a climb from the bottom to the centre of the chart, with a climb from the centre to the top. Without logarithmic growth there would be no need for a log curve, it would only make life harder, so I wouldn't use it. I never look at my normal stocks using log curves - they sure as hell don't grow logarithmically! (They're pretty good at losing me money!) The curve fits the narrative, but why would I use one that didn't? I'm not making up the data. It makes the curves, not me.
If you mean "would I use a log curve if the market is contracting" then the answer is also "no". As above, the log curve works because the growth is logarithmic. The growth is logarithmic because of tech adoption. If the growth were to (for whatever reason) recede; logarithms would no longer factor into the equation and they would be useless. For instance: I did not measure the recent crash with logarithms, but I did continue to look at the overall logarithmic growth trendline of crypto.
Are you suggesting that Bitcoin, 8 years ago when it's price was I dunno, fractions of a dollar and maybe 10 people in the world actually knew what it was, has any relationship whatsoever to the price now ?
Yes. It does. That's the beauty of technology adoption. It's predictable over the long term. Okay, maybe not quite from 10 people (I do ignore the outliers in the very early days), but definitely from a few thousand. This pattern is consistent and predictable. It's also logarithmic: From https://fs.bitcoinmagazine.com/
theres some correlation between the ATR from then to now, because it's all logarithmic ? Are you saying the price is going to keep increasing at a logarithmic rate, and some point in the future the daily ATR is going to be tens of thousands of dollars ?
I just had to teach myself ATR quickly (thanks for the education tip). Yes, ATR should also increase logarithmically as the peaks and troughs are also following logarithmic trajectories. We can expect even greater variation between future highs and lows. But at a daily level? No. The crypto cycles are fast, but not that fast! Logarithmic growth does not happen visibly over that sort of timespan. I use normal charts for short-term work. If I were day trading crypto and looking at charts of 1, 3, 5 or 7 days then I would not be using logs at all.
If not, then the log chart means literally nothing. There hasn't been a single asset in the history of the earth that's increased at a log rate forever,
Forever? No - that's impossible. But they can increase logarithmically as long as they are linked to a tech that is still growing within the first half of the S-curve! i.e. it has not yet achieved 50% adoption. As long as that holds true then growth rate will increase! (Not "growth", "growth rate" - important distinction.) Here is a log view of Amazon. It's not a crypto stock, but it IS linked to S-curve following tech (e-commerce and internet adoption). The blue line is logarithmic growth.
It looks ridiculous on a non-log curve - you can hardly even make out the Y2K "bubble"! Surely there was price movement there worth looking at?
In summary: crypto will grow logarithmically, not forever, but until it reaches 50% adoption.
It just can't happen, who's printing all the free money so they can buy infinite crypto to push the price up ?
That's a good point actually, where is the money coming from ? For Bitcoin to get to 100k by the end of the week/month/year as a lots of retards constantly predict, do you think they realise how much money would need to be pumped into the system to raise the market cap that high ?
Good question. You remind me of the Moore's Law skeptics. They've been saying for the last 20 years that the number of transistors on a PC processor is going to hit a physics brick wall and it's impossible for the law to hold. So far the law has kept on increasing logarithmically without a care as to what they think... 😄
But that's irrelevant. To answer your question: TG you offend me! Do you even read my lovingly hand-crafted posts about where money comes from? 😉 These two explain it best: https://steemit.com/cryptocurrency/@bitbrain/money-understanding-it-and-cryptocurrencies-part-2-recap-of-the-basics and https://steemit.com/cryptocurrency/@bitbrain/money-understanding-it-and-cryptocurrencies-part-3-cryptocurrencies
Fiat money has no upper limit. It's inflationary, but it can be printed indefinitely (under the guise of "stimulating the economy through liquidity" - also known as "getting you further into debt with the fatcats" and "devaluing what's in you bank account" - but I've already discussed this in the posts linked above). Remember that there was a time that every single dollar (and Euro/Pound/Peso/Yen/Rupee) etc never existed. Yet HERE THEY ARE! Legitimate currency. Backed by nothing more than a government promise (because we trust government promises! 😂). Where did it all come from? Thin air. The great thing about thin air is that it is so plentiful. THERE IS NOTHING STOPPING THE FIAT SUPPLY FROM INCREASING TO BUY ALL THE CRYPTO THAT IT NEEDS TO!
But it doesn't need to. You don't have to buy crypto at all. Remember: crypto is disrupting the fiat market. One of the very best things about crypto is that it is putting wealth generation into the hands of the common man! I don't need to buy what I can create myself. Crypto is not issued by central authorities. Most of it is mined by people like you and me. WE CAN CREATE IT. Bitcoin blocks are going to keep on generating 12.5 new BTC each (for the next two years or so before it gets halved again) whether someone buys them with fiat or not. As a deflationary currency (fixed maximum supply and guaranteed scarcity) it will continue to increase in value. Only by major holders dumping the currency can it drop in value. Crypto does not need fiat. It will end up independent of it! TG 20 years from now will be buying all her clothing online with DashCoin or LiteCoin or Nano, not with fiat! She'll buy her groceries with her TenX card or UTrust phone app, her ISP will be Substratum and her 2 SBD and 3.5 STEEM that she earned on a blogging experiment many years in the past will be worth a small fortune... Fiat is not required to make crypto run. It's not required to grow crypto. It can help the growth, but crypto will be generated and gain value with or without it. Demand will see to that.
There is nothing magical and secret squirrel about crypto that only a few select gurus can possibly understand, everyone else can understand it perfectly well like every other asset. In fact, they all look just like penny stocks which is basically what they are.
No secret. No magic. Anyone can do it. But I tell you again - see crypto as a normal stock (like a penny stock) and you'll never see its potential, the purpose of log curves or the importance of early adoption. This will lead to you greatly underestimate the speculative value of crypto - which is exactly what I maintain traditional investors are doing. Looking at crypto through the wrong set of filters: you're Michaelangelo trying to understand a Picasso.
Are you trying to say that I can trade all of those and make money (and believe me I do) but I somehow can't trade crypto for some strange and mystical reason known only to a select few ?
No. But I still think you need to get some skin in the game to learn the differences and peculiarities of crypto.
Crypto is a childs market and it trades like a childs market. Every single clique signal on crypto is a self fulfilling prophecy because everyone believes the same self taught amateur garbage. The other traders that I know that trade crypto claim it's the easiest thing in the world to trade, like taking candy from a very dumb baby and I have no reason to doubt them.
Most crypto traders are rank amateurs - especially the day traders. I'm sure you can decimate them. Remember that day trading crypto is not logarithmic, you can do that with no modifications to your existing skill set. It's only the longer-term stuff that differs.
I'm sure as shit not going to deposit my life savings, literally my future pension fund in a pissy little tinpot company that's only been around for 2 minutes, and could fold tomorrow and run off with the money. If I lose my money where it is now, then that would mean my country has financially collapsed and there's no standing Government.
I wouldn't either, though I question the future value of traditional pension funds (which are increasingly looking like unsustainable pyramid schemes themselves). You are obviously fortunate enough to live in a relatively stable country, not everybody has that luxury. In fact, most don't. Zimbabweans have gladly traded their fiat for greatly overpriced crypto. It's safer than some fiat currencies. Also remember that stable countries don't always stay stable. The world has been at peace (relatively speaking) for far too long now... Ask Germany about that hyperinflation you spoke about in your comment. My answer is a) not to invest more than I can afford to lose in crypto, and b) to diversify. I KNOW that some of my "pissy little tinpot companies" aren't going to exist a few years from now. I'm working that into the equation and spreading the risk accordingly. I also know that a few are going to give me great ROI...
Am I a bit of a fraud? I have a traditional pension fund. I use fiat for just about everything. If I really believed in crypto 100% then surely I would put everything into crypto?
Sadly the volatility of crypto doesn't permit that. My life circumstances are currently in flux and unfortunately I require a decent fiat buffer and income. Perhaps if I were not supporting others then I would be more risky with my money. I trust crypto to succeed, but the volatility is a very real risk (I may not have money when I need it) and I'm not counting on it as a source of income - I've essentially already written off my crypto investment.
don't take any of this personally, I'm just ranting in general :-) I look forward to lots more discussions on it
It takes something upwards of tactical nukes to p... me off - no risk there! I'm sure there will be many more discussions and I'm looking forward to them too. 😊
Yours in crypto,
Bit Brain
DISCLAIMER:
I am neither a financial advisor nor a professional trader/investor. This is not financial advice, investment advice or trading advice. Unless otherwise stated, all my posts are my opinion and nothing more. Crypto is highly volatile and you can easily lose everything in crypto. You invest at your own risk! Information I post may be erroneous or construed as being misleading. I will not be held responsible for anything which is incorrect, missing, out-of-date or fabricated. Any information you use is done so at your own risk. Always Do Your Own Research (DYOR) and realise that you and you alone are responsible for your crypto portfolio and whatever happens to it.
Ok, I promise I won't go on a long rant this time, but there are a few questions that you didn't really answer that maybe you could clarify.
This logarithm thing for start. I'll say, prices move based on economics, not imaginary lines drawn on charts. Sure, price likes to obey support and resistance for very sound financial and psychological reasons, no argument there. But a curved line that was started 8 years ago is still used by people today to make their trading decisions ?
What log are we talking about anyway ? what base ? Is it base 10 ? is it a natural log ? Is it some other weird and wonderful base that only works on crypto and unknown to us mere mortals ? Or is it just the one that looks like it works ? Give me any stock from the beginning of time and I'll produce a polynomial that fits it perfectly. But that has absolutely no bearing on future price, that's just Gamblers Fallacy, the human need to find patterns in chaos, and the death of 90% of new traders.
Nothing in crypto is new, it's just not special. Those charts you made yesterday just look like any new stock IPO curves, or any new technology, or social function or new anything. Bear in mind that hokey "Wall Street" diagram we referenced was made by someone in... Wall Street ? To demonstrate what a new stock bubble looks like in... Wall Street ? It was probably made way before blockchain was even invented ! It has nothing to do with crypto. But crypto, like all 'new' things follows the same pattern, just like everything else. That doesn't mean that crypto is 'special', it's just more proof that it behaves exactly like any other stock !
To show you the power of curve fitting, I'll challenge you to pick any currency pair, and I mean any, Majors, Minors, Exotic, Emerging Markets, and I'll show you the exact same diagrams from any single pair. It's easy to find patterns when you're looking for them. You should read my post on the chart delusion just to prove the futility of trying to see patterns where there are none.
I think you're going to find out very soon that your log growth channel stops working and the price just meanders out the side. Just like it has done for every single asset since the advent of time. Again, unless it's hyperinflation (which always leads to financial collapse) it's just not going to happen. Crypto is nothing special. Capitalist FIAT currency certainly doesn't hyperinflate or we'd all be back in the Stone Age by now as the monetary systems around the world would have failed.
So it still doesn't explain where all the money is coming from to buy all this crypto and keep it in a log upgrowth ? Salaries don't double every year, the cost of living doesn't half every year, so where is the money coming from ?
That Bitcoin spike was a bubble, pure and simple. That was the result of crypto becoming 'mainstream'. It was on the MSM daily and attracted all the idiots who thought they were going to make a quick buck. It was sold on lies and false promises by crypto investors (trying to push the price up on assets that they already owned..). That was all the 'ma and pa' investors, thinking they could make a quick buck and top up their pensions. And what happened ? They got raped, every single one of them. That was ordinary people, using their pensions, savings, college funds, all gone. The people with any sense saw the bubble and got out with an amazing profit. Crypto is dead to them now, so where are all these new investors coming from to keep this log upgrowth ?
Crypto is old news, the MSM forgot it, no longer news worthy, no-one is interested anymore. Its back in the hands of a few internet geeks, as it was before the bubble. Where is the money coming from ? Everyone who would want to be invested in crypto is already invested. If you think that banks and institutional investors are just going to jump in now and start spending then you don't understand how little money there is in crypto. The entire market cap of crypto is about 1% of a single FIAT currency. Why would anyone in a position of wealth invest in something that gives them a tiny fraction of a return ? To them, it's a penny stock, best left to the amateurs and their pissy $1000 accounts.
I utterly disagree about your statement on ATR. The ATR when it was fractions of a dollars years ago has absolutely no relation to what it is now. Neither does the current price. They are not linked in any single provable way. Sure, draw as many imaginary lines on a chart and curve fit to your hearts content, but your curve is never going to predict the future. You are curve fitting based on past performance. I have yet to see a single 'prediction' come true yet. Assets just don't follow mathematical formulas, they never have and never will.
Regarding Moores law, I'm sorry you're just wrong on that one. That 'law' has had its day. We are fast approaching the thermal limit of what's possible with junction sizes. Unless some amazing new technology appears that revolutionises heat dissipation... but then Moores law would be broken anyway as that would be a new technology, much like quantum computers will be exempt from 'the law'. Unfortunately before I became a full time trader I was a physicist, so if your somehow suggesting the law of physics are wrong then I'd be more than happy to have a chat about it. If you're right then there's probably a Nobel prize in it for you and you can forget all this crypto nonesense :-)
I'll wrap up now, in all seriousness though, please read that article I linked to above, it will explain my views on seeing patterns where there aren't any.
Oh wow. THAT was an eye opener! I just read the link (I haven't read the rest of your post yet) and I think I may have found the core of your chart disbelief bias.
It stems from the pattern recognition issue. The fact that you could draw lines on a temperature graph, on coin tosses etc.
Here is the difference between you and I (I think). You believe that these things are unrelated to trading. I don't.
My view may sound silly, but these things follow natural predictable patterns, the exact same way that trading does.
I firmly believe in applying the Normal Distribution to seemingly random events like this. I believe in Fibonacci patterns and fractals being applicable to stock markets, coin tosses, average temperatures and MANY other things. This article is worth reading https://en.wikipedia.org/wiki/Patterns_in_nature - it lists a few great examples. Sometimes the reasons for the patterns are simple enough to deduce e.g. why asteroids are found in bands and are not evenly distributed, sometimes they are impossible to determine at this stage (markets being a good example of that).
I will get to the rest of your post shortly and attempt to address any questions which I may have missed or failed to answer properly. But for now, sorry, but I must disagree with your post of "The Chart Delusion" at the fundamental level.
@britbrain and @tradergurl To be honest I am lost in the dark :)
Great to see such kind of interaction going on. Tradergurl pointed me into this direction.
I would suggest to both of you two that you register for the engagement league @abh12345 is running. With these kind and lengthy comments, you really can make a chance.
For both of you it will give you two more the attention both of you are entitled to and maybe some free steem may come your way :)
I have added you to my follow list britbrain. This was done based on a recommendation of tradegurl, so don't let her down :)
Keep on going!