Bitcoin Forum

Why does the price of bitcoin keep going up???

I'm pissed now that I sold all of mine.

It's gone up nearly $8 since I jumped ship.

I think about buying back in but I keep thinking it it is a high risk, and hard to make a decent profit at this price... Could it really get into the $60+ range?

I find it hard to believe.

So seriously... What is it?

What are the factors at play here.. Help me make an informed decision.

I just can't figure this thing out.

This is what I believe.

The price of bitcoin is roughly speaking determined by the number of adopters because each need to "have some" and the supply of bitcoins, apart from those mined (which is a pretty small amount these days) , is very small. In fact the supply is pretty much entirly provided by investors who hoarded since the price was lower deciding to sell when the price reaches a certain point.

The rate of new adoption is key, and heres the thing. Each person in the know has contact with others who are not, organisations etc, and the rate of expansion increases with the total usage. Its a rather vicious circle.

Over a long period of time, assuming the Bitcoin experiment does not fail in some way which we have all overlooked, then the supply increases slightly and as usage (which includes investers) increases the demand is going to increase massively.

This is the reason why I belive the price of bitcoin has increased, and there is presure for it to continue to do so. There is also anxiety about the new year high: people have to get used to the price and once this happens I predict the price will once more rise substantially.

Another way to look at this is that theres a circle with Bitcoin users outside and non-users outside. The "space" outside is massively bigger than the space inside, and the circumference of the circle is where the discussions about adopting and using bitcoin occur. Gradually the circle gets bigger. As it does so the size of the cicumference gets bigger and so the rate of new adoptors gets bigger. The mining subsidy will only go down. The only place new coinsd can come from is sellers and the only way to get people to sell is to raise the price. So that is what happens.

Thats my explanation.

1) Either Bitcoin goes to $0 in a few years or to very high levels like $10,000/$100,000+.

2) Supposing it's going to the high figures, it logically must traverse a path from its current price of $35 to those high numbers. That path must be very steep on average, or it won't make it there in a few years. The slower it goes right now the faster it will have to eventually go, and it would certainly not be surprising in this scenario if it continued growing rapidly right now.

3) Therefore, if you think there is a decent chance Bitcoin could be successful, there is no cause to be surprised if it continues growing at breaknecks speeds for several years.

Are you in this for a quick punt?

If so, give yourself a pat on the back (you probably made money) and don't look at the price anymore

But the case differs if you are actually bullish about bitcoin in the long term and sold because you wanted to make money on a trade

IMO trying to catch the peak (provided you are long term bullish) is just risky business.

The fact of the matter is, if you truly believe one day everyone will have heard of, or will use, bitcoin, then you cashed out way too early. There's too much potential demand relative to supply, for now at least.

Whether or not to buy in now simply depends on your bitcoin price expectation on your investment horizon.

logically speaking, nobody has a slightest idea what bitcoin price should be. there are a number of theories to base informed decision at, but they vary from $2 to hundreds thousands. so the only way to know what the price is, is to look at the market price. right now, it's going up ;) at some level, it will stop and go down for several months. then back up again. etc.

see, amazingly helpful :) but really, bitcoin is not tied to any external factors, so it can cost anything at any moment. so you either believe in it and hold, or you don't and sell. easy.

Don't suffer because these grapes are a bit sour ;)

Now seriously, you made a profit so you are in a better position than 99% of the humanity who never had any.

You speculated and came out with more than you came in, that is a good result any way you look at it. Any profit could always had been better. You could have invested more or chose a slightly better moment to buy or sell. It's just the way it is.

If you don't get it after reading this thread (https://bitcointalk.org/index.php?topic=143973.0;all), then you're better off staying off the boat.

The only thing that really mathers is that btc fulfills an hugh need worldwide on the internet and therefore sells itself, easy...!!!

Every succesfull bussines fulfills needs, so find out the need and start fulfilling them..!!!  

 ;) :D ;D :P

( damn i wish i had some asics on the shelfs they fulfill some needs)

Srry for my poor English

well, looking at the last 1 1/2 years, you have a fairly good chance to buy back at a lower level. but on the other hand, the past might never repeat again!
if you look at the logarithmic chart of the last two years, you can draw a nice baseline at the bottoms. this one is just approaching 20 (above the last solid support at ~13) … the latest increase might be a sign of an increasing adoption rate, and this behavior is nonlinear. if more and more know about it and tell even more, you might get this: http://en.wikipedia.org/wiki/Percolation_theory
but nobody knows this and it could all be a temporary systematic trend too.

This is called the 'monte carlo fallacy', if it's black it must be red.......soon.

Uh.. No.

Read again.

Welcome to the Bull Market!

As much as some of the bears say they are perfectly happy having made a thousand percent profit after having sold at 13, I'm here to tell you that they are kicking themselves in the pants right now.

And you know what?   They will be a significant part of the continued ramp once they scramble to get back on the train.

You can not compare to a company. Bitcoin is not a company, and coins multiplied by price per coin is not capital.

It is money.

There is always enough money.

Price of money is the inverse of all other prices. So if a blue barrel of oil is 2 BTC, price of bitcoin is 1 bbl/2.

Price of money is defined by demand and supply. Supply is what people want to sell for (number of coins at XX USD). Demand is what people want to buy for (number of coins at XX USD). Number of existing coins is not supply (but of course sellers and buyers take note of it). Want or need is not demand - what offer you bring to the market is demand.

Number of users and their holding preferences, expressed with X coins at Y price on the market, is demand.

We think demand can grow with new users.

People want to hold bitcoins a) because it is safe, no inevitable devaluation, and b) because it is or will be useful.

https://bitcointalk.org/index.php?topic=143973.0

Bitcoin is a fundamental new technology. It was engineered specifically to drive a global economy on the internet. Thinking that it will fail is believing that the internet will fail. It is possible, but unlikely. If you want to understand the potential (or inevitable) adoption of Bitcoin, then look at the adoption of the internet. As the internet is a force of freedom of speech, so will Bitcoin be the force of freedom of exchange.

I dont forsee the btc to slow down anytime soon. Since I have been involved (NOV 2012) Ive seen it go from about $11 to $35 where it is today.. That is 4 months, and it has tripled! Never seen anything like this, and It is absolutely exciting! I think it is still a very safe investment today, and as time goes on it will only improve. Its a no brainer. It is filling a huge void, that was never there before. If you understand who is using, why they are using, how many more will adopt it, its very easy to see there is no stopping this train.. I am still buying, and plan to keep buying. Depending how long it takes to hit $40, I will most likely continue to buy up to $50.

Bitcoin has recently garnered increased attention from alternative media:

http://www.dailyreckoning.com.au/boycott-bitcoin/2013/03/04/

http://www.dailyreckoning.com.au/bitcoin-get-rich-or-die-mining/2013/02/27/

Why is bitcoin currently going up at a rapid rate?  Because people are buying hoping to sell to someone at a higher price.  Why is the price going higher?  Because people are hoping to sell to someone else to make a quick profit.  Once the supply of new entrants ebbs or stops the earlier adopters cash in, plunging the market.  We saw this in 2011.  Will we see it again in 2013?  It's only obvious in hindsight.

A 90%+ drop was possible within six months.  History does not repeat, but it rhymes.

Don't get me wrong, I'm all bullish on bitcoin, but the bolded part is exactly what I thought in summer '11.

The fundamentals are much better, though and this time it's not some gamer-geeks jumping on, but "real" people. They are here to stay because bitcoin is useful and its inflation known.

The way the exchange rate has increased is different as well. The rally has been actively cooled with fake ask walls on a number of occasions.

Has anybody else thought about this question--for a crash to happen, you have to get people to panic, but why should people panic?

I can see some foolish investor taking his house mortgage or whatever and go all-in on btc at some price like $40. Such an idiot would definitely panic if the price goes down to $39, so it's only a matter of time before there's enough people with mental stop-losses set within 10% of the current price, who would cash out on the first significant dip in price.

So basically the longer the price steadily climbs up, the more there will be people who have risked and invested what they can't afford to lose, and they will panic, and I don't know, bring the price down to like $25! :)

One can only hope. The exchange rate re-visits $25/BTC and I'm dumping other investments to get more coins.

If that happened, I doubt if bitcoin would have totally gone mainstream already. ;D

What I intend to say is this:Bulls have already profited massively from the current rally, and a bitcoin crash would by no means be a "flash crash", it's going to take days,  if not months, to fully pan out, there would be enough time for a bull to comfortably recoup his investment and make a handsome ,though not maximized profit, before reinvesting a part of his profits in bitcoin, if it's not a "spot the top or lose everything" scenario, why should they panic?

demand>supply

also bitcoin gains gold and silver status in the mainstream

I mean this in the nicest way possible...please don't buy back in until you get it.

I don't quite recall '11 exactly enough (it just went too fast) but I think you are right... there was no activity to try to cool the rally.

However you don't take into account the fact that the people who invested when we were at $10 or $20 have a huge margin before they have any reason to worry as the price is at $35. So the danger of panicking isn't cumulative for each idiot.

Pssst... guys... the ones who are investing what they can't afford to lose aren't the ones driving this rally. We'd be wise not to base our decisions on their mindset  ;D

I am not sure we can conclusively say that every person buying now at this price are investing what they can't afford to lose

depends on the person really i think, also food for thought wouldn't any market that thrives on investors have a select group of fools who don't think several steps in every direction ahead? correct me if i am wrong but generally those who invest in bitcoin have a attitude and a set value in their mind their are willing to risk and accept the loss, ultimately it comes down to fear and how everyone reacts to losing the slightly amount or if they decide they can't handle the emotional ride

The price of a bitcoin is irrelevant. Even if bitcoin were $1000 each it would be a good investment if it rose to $1200. That's a 20% return!  It's never too late to get in on a rising price.

Yes, but they can panic in advance, seeing the price approaching their buy-in level. Not sure that I agree with oak that flashcrash is not possible anymore - Gox is bigger that in 2011, but order book is still thin at only about 100k coins to go to $20, so it takes 2.5 million of profit taking for a significant dip. That's why high prices I think is important - price would be much more stable if we steadily grow to triple digits.

The 2011 crash took about a month to plunge the price under $15, even let's just say, we now have 1/10 of that much time--3 days, would that not be enough for you? Not to say the early adopters did not care that much about at what price they cash out--they got the bitcoins for cents.

There was probably hardly any liquidity left on the exchange either.

People always talk about how each bitcoin will worth after each one on the planet will own 1 of them, this is short sighted view in my opinion

Even everyone on the planet already get their hand on bitcoin, it is still early phase of the adoption. The well known limited supply nature make bitcoin a perfect target for saving without worrying about the lose of its value, it is more like a permanent promise about the trustworthiness, and it is backed by mathematics and network (more or less today's prevailing religion)

And the demand for saving is huge, because now we know that government can not hold their promise for repayment of pension due to various problems in the economy/financial crisis etc...

I foresee there will be a huge trend of private pension saving, and bitcoin definitely will become a very important part in that portfolio

Given your statement (which i agree with), I think it's slightly amusing how the built-in coin generation rate curve looks a lot like the Internet adoption curve:

http://pewinternet.org/~/media/Infographics/Report%20Infographics/2012/16%20-%20Digital%20differences/Internet%20adoption.jpg

That's most likely a meaningless coincidence.  

However, the interesting point from the chart, is that if the adoption rate of both phenomena are similar, it would imply that most of the adoption (& price gains?) will occur approximately within 10 years, i.e. by 2020.  The X factor being that the existence of the Internet accelerates information dispersion and uptake by at least twofold, but on the negative side a brand new type of money has to deal with an entrenched legacy mentality and infrastructure that is tougher to convert.  So perhaps Bitcoin might only need 4 or 5 years to reach global awareness and adoption (similar to something like Facebook between 2008 to 2012), or it could take 20 years to fully overcome the inertia of existing moneys and payment systems.

i'm much more interested in comparing Bitcoin asymptotic growth to this:

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=AMBNS&scale=Left&range=Max&cosd=1918-01-01&coed=2013-01-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Monthly&fam=avg&fgst=lin&transformation=lin&vintage_date=2013-03-04&revision_date=2013-03-04

Can't argue with you there but there arent that many people who own 100K BTC. And those who do probably were pioneers who picked their coins up for next to nothing. Which, if i am guessing right, will not be too perturbed by sudden price swings as long as bitcoin remains fundamentally sound

As long as BTC performs, or has the potential to perform, the way people think it will. We don't have to worry about a crash of apocalyptical proportions (major price swings on the other hand...). But if one day something happens to end the bitcoin dream (like a major hack, or total global ban) then we all jump ship at the same time and no one will come out of it without losing close to everything they have

agreed with post above

i think to many big players are involved at this point and if one were to go down the market could handle it,

when coinlab opens i am excited to see how the market will react to quarter million dollar buys and sells

Rick Falkvinge 2011 in Prague: "I predict bitcoin will reach usability sometime in 2019". (with "usability" here he means "mainstream adoption")

watch vid for more great stuff:

http://www.youtube.com/watch?feature=player_detailpage&v=mjmuPqkVwWc#t=1563s

He he, that's the best case scenario, 100% of USD printed going straight to BTC, the same way that many folks in banana republics currently put all their money into USD right after they get their paycheck.  Could happen within the next 10 years once the UST bond bubble bursts and the USD starts losing its irrational reputation as a safe parking place.  And imagine not just the USD monetary base, but the entire plane's monetary base trying to fit into 21 million units.

Thanks, I have a soft spot for Falkvigne and hope to meet him in person someday.  Aside from digging his championing of liberty in general, his fantastic series of Bitcoin articles in 2011 (including the famous "putting all my savings in Bitcoin") were my personal catalyst for dipping my first toe into the BTC waters.

i hope he didn't get hurt too bad selling.  he must've been whipsawed bad.

Its yet to be seen if bitcoin can scale given the block size issue and a hard fork managed badly could seriously put a dent in confidence.

There are good reasons to be cautious.

Yep he should've re-read his own articles and stayed the course during those dark days.

I hope he re-bought around the conference when price was around $3.

...Why do financially sensible people jump lemming-like into hare-brained speculative frenzies--only to jump broker-like out of windows when their fantasies dissolve? We may think that the Great Crash of 1929, junk bonds of the '80s, and over-valued high-tech stocks of the '90s are peculiarly 20th century aberrations, but Mackay's classic--first published in 1841--shows that the madness and confusion of crowds knows no limits, and has no temporal bounds. These are extraordinarily illuminating,and, unfortunately, entertaining tales of chicanery, greed and naivete. Essential reading for any student of human nature or the transmission of ideas.

Extraordinary Popular Delusions and the Madness of Crowds (http://www.amazon.com/Extraordinary-Popular-Delusions-Madness-Crowds/dp/1604594411)

Does this graph mean what I think it does. If it does then it's much worse than I thought and my opinion wasn't that conservative to begin with ... wtf

(So I am asking have the amount of dollars in circulation tripled since 2008? :|)

Orrrrrr, it could be somewhere in between.  I'll wager that BTC will not be $0 and it will not be $10k/$100k within your estimates.  To make a statement like that is foolish.  

To the OP, sorry you took everything off the table.  In my experience, unless you have the foresight like ZB that your investment may be 0, sell off a little and take some profits.  I started this experiment when BTC=4$, sold a little, bought a little, and never looked back.   Best you could hope for now is maybe a correction like 10-20% and get back in the game.  

Well this is the monetary base.  So it isn't all dollars it is the fed's balance sheet.  But since the monetary base is the starting point for FRB yes the amount of dollars has "exploded" over the last couple years.  Here is the equivalent chart for the M2.

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=M2&scale=Left&range=Max&cosd=1980-11-03&coed=2013-02-18&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Weekly%2C+Ending+Monday&fam=avg&fgst=lin&transformation=lin&vintage_date=2013-03-04&revision_date=2013-03-04

The FED only know one way to stimulate the economy and that is to pour dollars on everything like gasoline.  The M2 has "only" expanded 60% or so in the last three years.  Why?  The FED can't directly change the amount of money in circulation.  It can only create conditions where banks increase debt which produces more money.  However banks have found this great loophole.  They borrow money from the FED for essentially 0% dump it into Tbonds for 2% to 3% and collect a nearly risk free return. 

Still 60% M2 inflation in three years is pretty huge.  You may be wondering if the number of dollars has increased by 60%+ why haven't prices almost doubled.  Well velocity has fallen off a cliff.

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&id=M2V&scale=Left&range=Max&cosd=1959-01-01&coed=2012-10-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Quarterly&fam=avg&fgst=lin&transformation=lin&vintage_date=2013-03-04&revision_date=2013-03-04

The more the economy stagnates the more the FED does the only thing it can do which is print more dollars, however banks are growing loans so the economy sees less and less of that money.   So the fed keeps printing and printing and printing in order to coax the economy to life.  Kinda like someone who can't get a barbaque lit so their solution is to keep dumping gasoline on it.  One gallon doesn't work, lets try 2 gallons, 5 gallons, 50 gallons, hey back up that tanker truck.

However if the economy ever grew by any significant % suddenly their would be a "shortage" of dollars velocity would skyrocket and that would be the spark for an inflationary inferno.  Of course the omniprescent FED will see this coming and contract the money supply at the perfect time to neither hurt growth nor let inflation get out of control.  If it sounds highly risk, don't worry the FED has a great track record with the almost inhuman precision needed to manipulate the world's large economy.  As an example of their awesome skill in manipulating the economy to maximum benefit, take a look at the housing bubble.  They quickly saw that low interest rates were fueling an utterly unstable bubble in housing prices and were able to gently bring prices down averting the recession of 2008 and expanding the economic expansion for 2000 straight through 2013 with massive growth in real GDP, employment, and overall prosperity ... er wait. :)

Thanks for that, it's the velocity of money that is often overlooked. The fed is out of tools and is really painted into a corner at this point.

Thanks for explanation. It is much more in line with what I thought then, an exponential increase that seems to be in line with the last 15-20 years at least and not much steeper than the 15-20 years before that. Pretty depressing but tripling the amount of a currency in circulation is a hell of a lot worse than 60% dilution i the same period. 200% dilution (tripling) looks like the beginning of hyperinflation :D

Edit:

If these numbers are accurate how can 60% inflation be true for the ~5 year time frame? Don't Keynesians aim for a long term inflation of 2.5-3%? Even for 3% they shouldn't inflate the currency base with more than 1.03^5 = 1.16 (16%) then! 60% is 9.9% YOY. Has this been going on since 1995? Hell even the incline between 1980 and 1995 looks way too steep.

It is way too steep to go on indefinitely, but if you're massively indebted and lack the means to repay then repaying with massively devalued currency may be your only option aside from open default.

Bitcoin are the future for peoples.. more and more peoples are realizing it.

Fiat are so much debase, and it's only the begining of the realm where fiat are heading to toilet paper use..

World economies are in a so bad shape.. The future is not bright at all..

It took me more than a year to realize how much this thing (bitcoin) is great.  Under 100$ it really undervaluated.. IMO, it will stabilize well over 1000$ !
Before realizing how powerfull bitcoins are, I've sold more than 5000 under a dollar.

This is not yet a bubble, look at all-time data log chart, you will see that we are'nt even entering in the bubble territory. 

Bitoin are to money, what's email are to regular post and even a lot more.. welcome to the future..

When you'll pay 200$ for a week of potatoes, you'll understand.. those who are pilling fiat for their old days will regret so much !

Just read some interesting literatures about gold rush in california. During the first 5 years after gold discovery, some 300,000 people moved into this area to mine gold and on average each person digged out some gold that worth around 70,000 USD in today's price

Based on general economic theory, extra money supply will create inflation, but the California gold rush just proved how wrong that theory is. The prosperity of west coast were largely driven by the discovery of those gold and the increased purchasing power of these area, and the inflation rate during those years are almost zero based on US statistic data

This again proved that inflation has no direct relation to money supply, as long as those money are honest and debt free. It is only those fiat money generated out of thin air could create hyper inflation, since people have little trust in those money

it was $800B back then.  it's almost quadrupled since.

Where do you think Bitcoin is in this curve?

actually, i'm very fond of Roman Candles.  when you see something like this, you know you got a problem:

http://research.stlouisfed.org/fred2/data/EXCRESNS_Max_630_378.png

Bitcoin is the vertical part; except you need to color it green.

Price quadrupling in two years? Not satisified. :D

ok, seriously.  if this were Bitcoin, i'd say we're around 1970.

DoomDumas, I love your posts. Not only because we think alike and you're ultra-bull, but also because of your funny-as-hell english mistakes.

I want this part on a T-Shirt:

FIAT
are so much
debase
                   DoomDumas
                       bitcointalk
                        March '13

lol

ALL YOUR DEBASE ARE BELONG TO US!

Money velocity is some magic quantity someone has cooked up just to make some stupid formula look more likely.

Lets analyze it. Peter has a big house, because he has a family and so on, but Paul has only a small house plus some money in the bank. Something happens, Peter looses his family, and Paul reconsiders, Peter sells the big house and now has some money. Ok the money has moved. Something happens again, Peter buys back the big house, Paul reconsiders again and now sits with most of the money. The money has moved again, high velocity. But compared to the starting situation, nothing has changed. Therefore, high money velocity only means that people change their value scales more often.

Fascinating. Now what if Peter is removed and replaced with the FRBNY? How quickly is that new monopoly money that benji is cooking up being absorbed into the economy? Do you think Paul can help with that? What if he takes out a loan to buy a house? If banks aren't lending and/or people aren't borrowing while money(debt) is being destroyed through credit defaults then where's the mechanism that creates debt greater than previous debt? Cash for clunkers v2.0 anyone?

What you're suggesting is that either helicopter ben did not produce all those dollars seen in the chart above AND he's lying when he says he's printing(QE infinity) or those dollars have not yet trickled down to the peasants in the street yet...a function of velocity. It's this velocity factor that allows for both inflation and deflation to exist simultaneously. The economy of a country as large as the US is a complicated animal.

I try again, starting over.

First, bitcoin is not capital, it is not a company, it is money. If you have a good idea, you might get together with some friends, invest, make a good business. After you succeeded, you will have the choice to continue under competition, or sell out. With bitcoin, think of it as you have not yet decided what to invest in, and when you sell out, think that you go back to bitcoin.

Think not of 40 USD per bitcoin, think of 0.025 BTC per dollar. Will you go into dollar, stay for a year, then pull out? What about yen, will you go into yen now, stay there a year then sell out? The relevant central bank has literally said that they will do whatever it takes to reduce the value of the yen, and we know they can find a way. So is it smart to go into yen now?

Why do we want to think about bitcoin this apparently backwards way? Because we think bitcoins are better money, they will keep their value, and are easy to get rid of for other valueable things when you want. When people become aware of this, demand for bitcoins will increase. Nobody knows how many people will like bitcoins, and how many each of them will like to hold. Two months salary, maybe more, since it will keep its value.

This situation is obviously not the case now, but some people with foresight, anticipating some value in the future, push the price upwards now.

Can the price overshoot its natural level? Yes of course, but there are also tons of naysayers out there, keeping the optimists in check.

xxjs yes many people still look at bitcoin as some very risky HYIP, so they deserve to be punished by low profits or losses, as they sell low buy high.

As for current naysayers, somehow I feel we lost all of them during the stop at $30 level. They don't have any substantial coins any longer. So now the price will grow until the new breed of naysayers decides it is too high too soon and they should get off.

It will keep going up until the growth dies out. And then it'll come down. The trick is to know when that happens. I figure it's smarter to only sell after it's already come down somewhat than to try to anticipate the peak.

My gut feeling is that the peak will be higher than $50 but lower than $300. Time will tell. After the peak we might come down back to single digits even.

If I had unwisely gotten out of bitcoin I sure as hell wouldn't be buying now, but I'd try to catch the next bottom. Whenever and at whatever price level that might be.

You gulp up lots of newspeak here, confusing every topic you touch, and use it to argue that I can not understand economy? If you think that inflation and deflation can exist simultaneously, does that make you a great economist?

Yes that is one thing I like about entrepreneuring, when they consistently take wrong decisions, they are dethroned from their entrepreneur position and fall back into the pool of wage receivers.

It does not have to go down. It can stay on some level and be a useful and stable type of money. If the speculators are wrong, the price may overshoot before it settles. In the stable end-situation, hoarding for profit is not sustainable. Owning bitcoins in that stage does not produce profit or interest.

My thoughts:

1) People with Bitcoins are not selling cause they know/think the price will get much higher in a couple of years.
2) This causes a price rise since the ammount of sellers is decreasing if the price is in a rally.
3) Cause of this rally and the good news more and more people want to jump in the boat, so the bids increase.
4) Cause the price is based on bid/ask (which gets out of balance) the price rises which throws us back at point 1 of this summary and explaining this rally.

This is correct. It will continue until the market for bitcoins is saturated, then there will be pressure downwards because speculative gain is no more possible. Noone knows for sure when this will happen.

Yeah your peter & paul story makes it very clear how firmly you grasp economic theory. Sorry to involve complex concepts...like credit. Clearly that doesn't exist either as otherwise peter or paul would've borrowed in your all encompassing epic.

The concept under discussion here is money velocity. I claim that this concept only tells the speed at which people change their minds, and it is not useful to decide the price of money. Only the number of money available, and the public's preferences for holding money decides the price of money.

IOW interest rates have zero bearing on the price of money. OKIE DOKE. We're done here.

You win all of the internets lol

piramida, you repeatedly surprise me with nice fore-/insights.

Yay! My very own interwebz! ;D

http://www.youtube.com/watch?v=8fvTxv46ano

thanks, it's easy to be right when the price goes in a straight line :) just wish I spent more time thinking about what bitcoins really is back in 2010, dismissed it as monopoly money first and will never forget this silliness.

I dismissed it as "probably broken software" in May 2010 because my laptop hadn't mined even a measly 0.01 BTC which I would've expected. Stupid me for not looking harder and discovering the smallest unit to mine was a block worth BTC 50...

You guys would feet better if you come to think of what an early adopter who dumped tens of thousands of BTCs back in 2011 would feel now.

Seriously, this is how Bitcoin and free market combined to achieve fairness of the distribution, we are all just pawns of the history.

Yep, same. I downloaded blockchain, CPU mined for two days, got worried this crap is burning my laptop and not generating anything, checked forums and saw guys running around with topics like "100,000 bitcoins for 100 dolalrs any takers?", and uninstalled / forgot about it until June next year. Dumb.

Dumbness is being punished (not like in the "real" financial world). I like it. A bit less when it's my own dumbness, though.

More people want bitcoins than want to get rid of them.  Bitcoin has the potential to be more important than any company on earth as it could become involved in a significant portion of all transactions around the world.  With this in mind a bitcoin price in the thousands is quite possible.  Consider the Market Cap of Apple and Divide it by 21 Million...  Bitcoin has the potential to be way more important than Apple.  Of course there is a good chance, it could replaced by another currency which works even better or it could have a flaw and go to Zero.

In my opinion Bitcoin as a speculative investment has more potential upside than any investment I have ever seen in my life.  There is also a very high risk of it becoming close to worthless.  I think a good strategy with this in mind is decide what small, or very small percentage of your net worth you want to expose to this risk and then buy and hold.  If things work out you will probably do pretty well.  If they don't you'll lose your small percentage of your net worth invested.

Hopefully that helps.

Seems like normal growth to date..

This should double again and again !

Before the june 2011 bubble, price doubled few time in less than a month..  That's old data, not really to be compared to those days state of the coin !
After the long correction to 2, price doubled few time in a time frame from 1 to 3 month.. we are still in this trend..

0.1   0.2   3 weeks         late 2010
0.2   0.4   1 week         late 2010
0.5   1.0   less than a week   feb 2011
1.0   2.0   less than 2 weeks   apr 2011
2.0   4.0   less than 2 weeks   may 2011
5   10   less than a month   may 2011
10   20   less than a week   june 2011
Bubble
Bubble pop
then again
2   4   1 month         late 2011
4   8   1 month         mid 2012
10   20   3 month         not so long ago
20   40   1 month         now !

So, IMO, it would be reasonable to call for 80/BTC within 3 month.. and easy way to 100 before 2014 !
Very reasonable, concidering BTC are just in the begining to be known, as 99% of the world population did'nt even heard of it yet.  The 1% who knows about BTC, a small portion realize the power of it.
Very reasonable, concidering the progress made in the last years, are growing from an experiment to something more and more solid, trusted.

Just my opinion !

;)  I do my best, happy to entertain you :)

This is what Excel predicts:

http://i48.tinypic.com/ilvazb.jpg

We'd all be rich if excel could predict the price.  This market has no precedent.   I do hope it follows that line though.  :)

Maybe Bitcoin is BRK.A on steroids
http://www.google.com/finance/chart?q=NYSE:BRK.A&tlf=12&chst=vks&chs=306x96&chsc=1&p=max

If you draw that line from the start via the average of June 2011 it would have been $1000000~ now lol.

There are physical limits to where the price can go in monetary terms. I expect first one to be the gold price barrier: ~ 500g Gold/BTC
Please note these physical limits don't exist with paper currencies like the USD, because they are infinitely inflatable.

Thanks for sharing this chart. I think the decrease in money velocity is the real problem behind the scene, it seems after 2000 the total consumption is decreasing most of the time, and this just showed that economy can not grow forever

But why the velocity is down is much more difficult to analyze. I think it is largely due to money concentration caued by technology advance and globalization/ and less and less future demand

or.... it is a natural phenomenon whenever money accumulates with a few very rich. They just can't spent fast enough, as the remaining 99.9% would.

Or people feel uncertain about being fired in a bad economy, thus logically save more for a rainy day...

I wanted to add that divide and conquer also applies to economy... and thus the velocity theory of money.

I don't think it's the people's fault. Watch the movie "end of road". It explains nicely how the situation of the common family slowly eroded throughout the last 40 years, until a point at which they had to take credit to keep up their standard of living. This game has ended now. There's no leverage anymore. The inflation machine has squeezed the economy dry.

Any news on this? I'm curious how it works. But too lazy to read the developer list. ;-)

The changes needed to make Bitcoin scale aren't conceptually difficult. The only problem is that for some reason people are opposed to allowing Bitcoin to succeed.

I actually lol'd when I saw that.  Thanks for the laugh.

If you think that's funny you'll love this new all time high thingy...

$40.90

Edit:

Make that:

$40.90 $41.10

Technically there is no problem, but that is not a technical problem, it is a split at much higher level

Just like compare Iphone with Adroid phone, some people like this, some people like that

Only those heavily invested in some altcoin or other. The rest of us know what needs to happen.

Here is a possible explantion. They need and are able to hire because they are processing more and more Bitcoin transactions. https://bitcointalk.org/index.php?topic=149573.0 (https://bitcointalk.org/index.php?topic=149573.0)

Good to know.

http://bitcoincharts.com/charts/chart.png?width=940&m=mtgoxUSD&SubmitButton=Draw&r=&i=Weekly&c=0&s=&e=&Prev=&Next=&t=S&b=B&a1=TMA&m1=10&a2=TMA&m2=25&x=1&i1=RSI&i2=MACD&i3=WilliamR&i4=&v=1&cv=0&ps=1&l=0&p=0&


Personally, I see support within the $25-30 range.

Don't get me wrong though, I do feel that Bitcoin will gain more in value, but not until there a pull back from people taking in profits.
Everyone so hyped about the news, it's just being overbought.

However, I do believe in a few years down the line, 1 BTC will =  $500 or maybe even $1,000.
If BitCoin was to fail, I think it would had already done so by now.

Once these coins fully distributed, the value of these coins will rise even higher.

I remember when Paypal was just beta and I was trying to get referrals.. . everyone laughed at me and asked "wtf is a PayPal?"
When Paypal got a bit more popular, you see them on some home business type websites and people just saw them as  "cheap" or non-legit websites -- its now 15 years later (damn, I wish i stocked up when they went IPO) and look where they are at today! Just about every website accepts them as a form of payment! Hell, I even recall seeing a PayPal opton at Home Depot and Ace Hardware! 15 years may seem like a long time, but if you think about it.. . when paypal was just beta, it feels like it was just yesterday.

I really see the same thing happening to for BitCoin, the only difference is that it will pick up much faster since the newer generation is more willing to accept this new concept.


EDIT:

I forgot to note, please don't be an idiot taking out a mortgage or any type loan to invest in Bitcoins.
Invest a 'small' % of your monthly income instead.

If you missed the first opportunity, sell now.

This is to slow. Try to use the market cap instead  :D

https://blockchain.info/charts/market-cap?showDataPoints=false&show_header=true&daysAverageString=1&timespan=all&scale=1&address=

That was fun.

Any more opining on this? Do you see the profit taking occurring at or around $50 like last time?

Looking back at my old post and reading your reply.. .
I guess you were wrong.