I have no better barometer of bitcoin community sentiment than hash rates, so I will use that.  Here is what looks to be happening:  hash rates on deepbit are now below a terahash.  In the coming days this will be reflected in slower transaction rates and rapidly dropping next difficulty estimate.

The same miners who can't cash out will decide to shut down knowing they'll be mining those coins at  < 800k difficulty if they take a break.   We've seen this with alt chains -- when it looks like the next difficulty adjustment is severe enough there is a negative feedback loop in computing power.  The ones left (free power miners) mine at a disadvantage for a disproportionately long time.

The risk for bitcoin price is a larger % of miners may decide to sell some knowing they'll mine back more coins, cheaper.  Going from 15-20% of miners selling their stash to even 30% would be horrific.  If I estimate my cost basis to make a bitcoin just went from $2.80 to $.90 I'll have no problems dumping at $2.

If I see a 75% drop in hashing power that'd be my confirmation of a bottom.   I will at that point switch strategy from bear to neutral and ready to go bull.

Still predicting a 300% rally for bitcoin in 2012.  Can't pinpoint a target, but it could be 50c to $1.50,  $1.25 to nearly $4... One thing is certain, we're all* going to be RICH! 

*"All" may not include greedy speculators that donated money during the slide from $32 to $2.

When price fell to the point where even at 4.6c/kwhr it was stupid to mine but hash rate did not fall I knew one thing -- 80% of the people who got into mining bitcoins in June are still mining, which means they are BULLISH.  They expect prices to go up, not down.  If they expected further down movement they'd shut off their machines and sell cards on ebay.

So when I saw price declining for months but hash rate mostly unchanged I knew there was lots and lots of downside to go.  Even at $6 it looked like we got nothing but bulls, so I was convinced the worst is not over.


Except that hash rate did NOT go down appreciably over the months since we were at $15.  Hence it's a valid indicator of broad sentiment (bullish) in an obviously down trending market.  People were talking bull, producing, but NOT buying.
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It never works like this.  Nobody "worries" about missing a "bottom" any more than they "worry" about missing a "top."  People generally follow the prevailing trend.  Once there's an uptrend, people will start getting concerned about missing out on the ride up.  Brownian motion near support and resistance levels doesn't matter.

I get a good laugh about you being concerned about revealing your positions.  Nobody cares.  And I can guess -- you mined and didn't sell, so are now long a few bitcoins at a buy in price of around $3 (factoring in hardware depreciation).

Even with free power there's the opportunity cost of not selling your mining hardware to buy bitcoins with it.  Even now my 2x5830s, if sold for $80 each on ebay, would buy more bitcoins than they'll profitably mine at current levels.   Expecting higher profits in the future is speculating and can be done through direct buy more efficiently.  There's replacement cost for hardware failure.  You may judge deepbit an invalid indicator of community sentiment but it's served me well so far.

Moreover, it was only a couple of days ago that you could fund your bitcoinica account with BTC (as opposed to money).  Until then it was too much work for me to do that, even though I too was beating the bear drum.

The other problem with shorting: the money making premise is based on the fact that something is overvalued.  When there's no rational tie between pricing and value what's to keep it from becoming vastly more overvalued before it crashes?  5:1 leverage is very much a double edged sword.  You could get a margin call and lose a fortune while still being right.  

Add to that unlimited downside with limited upside and it takes iron discipline to trade short.  A short position is not something you can leave open while not looking.

No, it's a good proxy for overall bitcoin ecosystem sentiment.  They're bullish and expecting BTC to go up, not down.  Anyone expecting lower BTC prices (like me) has already shut down.

Peak hashing power was 5.4 gigahash on deepbit.   Currently at 3.1.  Looking like about 60% of us are still bullish.

On BTC-E chat I saw someone talking to a guy with 10 6950s that's been mining since the peak and not selling.  He's holding 150 BTC.  For those playing the home game, that's a minimum of $250 in power and $3500 in video cards.  And a current market value of $390 for his output.  IMO this is the norm.  Lots of miners are in this boat, and they will keep on mining until they simply can't deny they've lost money.  Might take hardware failure for that to sink in.

The high hash rates on deepbit confirm it.

Looks like volatility is dying down, we're going to be doing the flatline stagnation thing.  Whew.  Time to enjoy a few well-deserved days of no 30% drops.

Typical pyramid.  A few winners, a whole lot of losers, and a few lucky people breaking even.

My indicator is hashing power on deepbit.   While 60%+ of the bitcoin community are still bullish on bitcoin it's not a bottom.

A bit late now, but people who sold at $4 could have bought back in today and cut that 3-4 year wait down to 1-2 years.  That's the thing, this dog CAN be traded on the way down.  It's just bagholding that is a terrible strategy in a bear market.  And people selling today at $3 might yet have an opportunity to get back in at $1.25.

I lucked out as well, was asleep when the big drops happened.  If I wasn't I'd have been tempted to get back on board possibly wiping out yesterday's gains.

The good news is deepbit hashing power is mostly unaffected.  There are LOTS of bulls out there.  So IMO this isn't capitulation, plenty of "buying opportunities" await.

This is my fear too.  There was no reason for mtgox to have 500k in an online, trade-capable account (during the first hack) unless they were trading their own market.  There is definitely non-zero chance they could be long BTC and short dollars.

Another fantastic day yielding another 20% return on original investment.  If this is suffering then consider me a masochist!

You have to have javascript enabled for it to work at all, and I didn't see a link to set up your workers (gotta cut-n-paste from the how to page).  Looks like less total hashing power than one of my CPUs, but definitely looking good if it gets some power.  Any donation % is better than the 5% of the 'other' pool. =)

Irrelelvant.  75% of the mining power and by proxy the bitcoin community joined between June and August.   For them the "long term" trend is academic, for them the trend looks completely different than for the 25% who are the top of the pyramid.

Yes, those 25% are not panicking.  But OTOH, they're not the ones with much skin in the game.

LTC prices are insanely high given the current difficulty.  We could use fewer people throwing money at it and more people throwing CPU at it.  This is the most promising CPU backed chain, it's a bit too early to have the speculators running things.

What this means: if you're long TBX or SC you may consider mining LTC, shorting LTC to prop up your favorite currency.  Because of no scamtastic premine there's not enough supply to satisfy LTC demand and prices being bid are completely nutball.  We got a day 1 bubble, in other words.

Oooh ooh me me!  I'm an optimist.  Just not at $3.  We'll talk again after capitulation and a recognizable up trend.  I'm willing to give up some potential profit not to buy in at the support level of a possible quintuple bottom (each one lower than the last) like the roaring bulls.

What it means: if there actually *IS* someone preying on the weakness of BTC, tomorrow would be a good day to do some dumping.  I suspect there is no such entity, there's just *an* early adopter trying to cash out a few tens of thousand BTC.

Wow, not bad.  Already a bigger hash rate for that chain than some pools in the bitcoin top 10.  I0C reboot, anyone?