# Last edited on 2015-03-07 22:27:00 by stolfilocal


ANALYSING THE PRICE HISTORY AS A SUM OF SEPARATE BUBBLES

  The premise is that the BTC price history can be explained as 
  the result of several bubbles of demand by separate communities/markets
  that added together.  

    1. Each bubble starts with an exponential rally *from zero*, 
    due to utilitarian demand and amplified by speculative demand.

    2. Eventually that community is saturated, and
    utilitarian demand stops growing.

    3. Speculative buyers realize that the utilitarian demand stopped
    growing, and dump as fast as possible as they expect other to dump
    too.  Demand often drops by more than 50% in a few days.

    4. That first drop undershoots the steady state demand (see below), perhaps
    because some of the utilitarian users dump it too, for fear that it
    will become useless;

    5. The demand bounces back from that bottom and may overshoot again,
    by a smaller amount. Phases 3--5 may repeat a few times in succession,
    with lower highs and shallower lows, like a few cycles of a damped
    oscillation.

    6. A steady state is then reached where the demand is approximately 
    stable or growing very slowly as that community grows.

    7. Sometimes the steady state lasts only a couple of months, and is
    followed by a slow exponential decline in demand, as the community
    becomes disenchanted and abandons BTC.

  The demands are cumulative. There is an unknown non-linear relation between 
  demand and price, but as long as each new bubble happens after the previous
  one has reached a steady state, the price bubbles can be assumed to so the price too is the sum of 
  
CREATING THE BUBBLE FILES

  We start with the smoothed reference price computed in the ../ref-price subdirectory,
  with {hrad} = 3.

  A bubble is defined by parameters
  
    {btag}  = a tag identifying the bubble, e.g. '2014-11'.
    {dini}  = date of start of rally.
    {dfin}  = last day before next bubble.
    {drate} = assumed decay rate (0 for constant plateau).
    {color} = a color to use when plotting.
    
  Once we have subtracted from the price all the previous bubbles, the
  price should be zero up to but not including {dini}. The next bubble
  is defined as a copy of the price from {dini} up to {dfin}, and a
  decaying eponential {P(d) = P(dfin) * drate**(d-dfin)} for all dates
  {d} after {dfin}.
  
    rundate="2015-02-27"
    hrad="14"
    
    rundate="2015-03-07"
    hrad="07"
    split_all_bubbles.sh \
        "${rundate}" "${hrad}" \
        "../smooth-price/out/2010-07-17--2015-02-20-PREF-USD-01d-sm${hrad}.txt"