Quote from: figmentofmyass on October 16, 2018, 09:32:57 PM

Quote from: Embeco on October 16, 2018, 09:30:12 AM

I have to say upfront that I'm no fan of technical analysis, even in traditional asset markets. There are 2 main reasons for this:
1) There is no scientific proof that technical analysis works at all. The only correlation between technical analysis and true market movements is that it is widely believed. And this leads to the next point
2) TA is a self-fulfilling prophecy. If people stopped believing in it, it would stop working right away. If people find new patterns they only start actually working once they get enough traction for other people to believe in them.

you've contradicted yourself. you say there's no proof that it works, then you assert that it works because it's a self-fulfilling prophecy. which one is it?

Thank you for your reply, really appreciate that stance!
Regarding your first point: I don't think I have contradicted myself, I may just not have sufficiently explained what I mean: There is no scientific proof, that the underlying principles of TA work for any other reason than the widespread belief that it works, meaning that it is a self-fulfilling prophecy and similar patterns would not form if they were not believed in by a large group of people, making them completely independent of the underlying economics.

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Quote from: Embeco on October 16, 2018, 09:30:12 AM

This is somewhat of a problem in traditional assets, but it is just a minor nuisance. The fundamental values of traditional assets always strike back, no matter what TA says. Found resistance? Doesn't matter if the underlying value shoots way up due to increasing sales, usage or whatever. Glad a value has some support? Doesn't matter if sales drop to near-zero, the price does not care about support.

At cryptocurrencies, however, those fundamental values don't work as there are rarely any.

there are also fundamentals underlying cryptocurrency that affect supply and demand to the spot market. if there's an existential protocol flaw or a significant network split, don't you think "support" might be broken too?

I absolutely think so. However, those fundamentals are time discrete. I cannot decide to do an analysis of the fundamentals right now, I can just analyze news coming out. That's opposed to traditional markets, where I can analyze fundamentals at any given time. i'm not saying this is bad, but it definitely powers volatility and TA.

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Quote from: Embeco on October 16, 2018, 09:30:12 AM

Most companies behind cryptocurrencies either have no product that is close to justifying their volume and value. Some of them (Bitcoin amongst them) do not even want to have one. Therefore they are subject to constant influence by those religiously believing in TA, which makes them an object of pure speculation. The fundamental values are "news", no matter the level of reliance.

In my opinion, this holds cryptocurrencies from being a usable and reliable method for everyday transaction use.

just because a market is speculative doesn't mean TA reigns supreme. what evidence do you have that TA is responsible for anything at all? this is a common assumption with no basis in fact.

traders (some of whom employ TA, some of whom employ FA, and some of whom are just randomly trading) are just supplying liquidity to the market. if anything, they make it less volatile (by adding liquidity) and therefore less speculative.

I have no evidence, hence the question in the thread title. For me, it is a question that I am asking myself and would like to get opinions - such as yours - on.
Regarding your last point I just wanted to throw in, that this exact same argument was the favorite argument of High Frequency Traders in traditional markets:
"We are not damaging the market, we are just supplying liquidity".
Turns out that was not the entire truth.