I am consistently astonished at the lack of understanding of the Bitcoin ecosystem and markets in general from users who have stuck through many cycles, and others who claim and otherwise air a general sense of economic learning. Case:
There are only a few large price swings that I cannot relate to any external event, in China or in the West. In particular, I still have no explanation for the rally that lifted the price from ~450$ to ~650$ between May/20 and Jun/10. But my guess is that it, too, was related to Chinese events and affected mostly the demand in China.
In my mind, the price movement in May from $420 to $680 is an Occam's Razor, the easiest event to explain of all the past year.
In April The Mt. Gox implosion had just happened, and after that the market completely bottomed out for 4 weeks straight. It was a completely dead market, with no trading activity at all. Forum participation had fallen to an all time low. People were saying that bitcoin was dead, and that the price might even fall further. But it didn't at that time.
So after 4 weeks sliding along at ~$420, at that time it was EVERYONE'S opinion, including the market makers, that the bottom had been found and that the only way to go from there was UP. Thus the sudden rush for major money sitting on the sidelines to get back into the market for what they perceived at that time as likely the lowest price level of the year. People thought that in just a few months from then (by June/July, maybe August at the latest) we would probably have another ATH. Of course now in hindsight, we see that it didn't turn out that way. And when it didn't happen when people thought it would, of course the market eventually corrected back down again. This brings us to where we are today.
It's such an obvious common sense explanation, I'm not sure why supposed 'smart' people like JorgeStolfi can't grasp this.
Edit: Also if you go back and look at the charts, you'll see that this same "mini-rally failed" pattern happened at the tail of the 2011 bubble as well. It is an observed and well known market phenomena in other speculative markets.
Yes, this cycle is a good common-sense explanation for the oscillations we see even after daily- and other-scale price movements. I believe these feedback loops reliably force the contours of the price graph into triangular and other patterns. It always makes me laugh to see the fools in the WALL OBSERVER thread alternatively express their bewilderment during the "correction" phase and excitement after each rebound, in real-time, following any indicative movement
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