I am not very eager to buy bitcoins at the moment. Though that may change quickly, the reason I am not buying right this moment can be explained by the above picture, which I am going to share with you. This is a screen cap of the “Mt. Gox Live” chart – this type of diagram is sometimes referred to loosely as an “order book.”
The blue line at $900 is known as an “ask wall.” By reading off the large dollar value at the top – right of the blue line, we can learn that nearly $8.8 million would need to change hands in order for the price of bitcoin to go above $900. This wall is keeping me from buying any bitcoins right now.
The reason I am choosing not to buy bitcoins while the wall is up at $900 can be understood by comparing the two possibilities below.
1) The price will slowly work its way up to $900, in the near future.
– In the worst case scenario, by not buying, I miss out on the profits for a gain of around ~7% from the current price up to $900
2) The bitcoin price falls today
– In this case I will be happy I did not buy.
While I wait to see where this wall goes, I am actually hoping for the price to fall, so I can use the liquid USD I have available to obtain more bitcoins than I would if I were to buy at the current price.