Title: bubble dynamics in Bitcoin Post by: jonald_fyookball on July 12, 2015, 01:12:38 PM bubbles can and do happen in any market.
with Bitcoin it's interesting because of the miners. first of all, there is always downward pressure because miners have to constantly sell coins. But during a bull breakout like we're seeing now, some miners will choose to hold a greater portion of their coins since they see the price rising. They can do this because they are getting more per coin for ones they do sell, thus covering their electricity for less, and also because they may expect price to rise further. Because less coins are being sold, the price rises further, feeding the cycle. However, if this goes on too long, the mining difficulty will rise as miners turn on more machines, thus driving down the miners' yield, which forces more selling and lower prices, which leads to greater sell offs across the board. So, the bottom line is, both the rise and fall in Bitcoin price action is exaggerated over other markers, not just because of the small market cap, but also by mining. Title: Re: bubble dynamics in Bitcoin Post by: Wexlike on July 12, 2015, 01:28:09 PM But you can't build asics as fast as the price is rising(sometimes). Furthermore when you keep the halving day in mind, it is also much better to maintain a balance regarding current and future emission and your own hashing power.
Title: Re: bubble dynamics in Bitcoin Post by: Amph on July 12, 2015, 02:18:01 PM the demand is simply stronger now, it isn't because the miners are selling less coins, this is only a consequence that will enforce the pump, so in the remote case that miners go crazy and start dumping again, i'm sure the market will absorb all their coins at this point
a real crash would be caused by something else, manipulation from big guy, as usual... Title: Re: bubble dynamics in Bitcoin Post by: IIOII on July 12, 2015, 03:59:24 PM So, the bottom line is, both the rise and fall in Bitcoin price action is exaggerated over other markers, not just because of the small market cap, but also by mining. I've read your explanation and the mechanism itself doesn't seem illogical. However, is there any data to support your claims? If miners speculate, why would they speculate only during breakouts / breakdowns? I mean, they could speculate anytime on rising prices and sell coins only when they have to (to cover costs). In my opinion, the small market cap is of high significance with the main contributing factor in Bitcoin's price movements being media reporting. Because Bitcoin is still only adopted by a comparatively small group of people, even a few new buyers will have a significant impact on price. Title: Re: bubble dynamics in Bitcoin Post by: jonald_fyookball on July 12, 2015, 09:25:47 PM So, the bottom line is, both the rise and fall in Bitcoin price action is exaggerated over other markers, not just because of the small market cap, but also by mining. I've read your explanation and the mechanism itself doesn't seem illogical. However, is there any data to support your claims? If miners speculate, why would they speculate only during breakouts / breakdowns? I mean, they could speculate anytime on rising prices and sell coins only when they have to (to cover costs). In my opinion, the small market cap is of high significance with the main contributing factor in Bitcoin's price movements being media reporting. Because Bitcoin is still only adopted by a comparatively small group of people, even a few new buyers will have a significant impact on price. No data, just a theory. You're right they could speculate anytime. You could easily argue just the opposite of what I said. That since the price went up, they are trying to dump more coins to earn more cash, including coins they had previously stashed. I just think there may be a large segment of miners that have been dumping at a certain level during for a long time at a certain level while the price was stable and now may choose to take a a wait and see approach while keeping their fiat income flat, meaning they are dumping less coins than before. |