Bitcoin Forum

How could the price shoot up from around 70 to 135 when the fundamentals could not be worse - bitcoin-24 halted, bitfloor shuts down and blockchain was down? Could people really rally because of that article about Western Union on fox?

Or, was the price of around 260 actually reflecting demand and the freefall to 50 was not because of some bubble but merely a technical glitch?

I suppose one rational explanation could be that most people buy bitcoins and hold. This makes the amount of bitcoins available even less.  Since a lot of people are still finding out about bitcoins or re-visiting bitcoins following all the media exposure, even more people want bitcoins. Translating to less sellers and more buyers. Hence the price is going up even though the lifeblood of the currency - exchanges - are being shut.

I just find it a bit amazing that people are willing to pay 119 for 1 bitcoin with all these exchanges being shut and DDos'ing and hacking and considering how difficult it is to even buy the thing.

Have you considered:

1.  Fundamentals have very little to do with how BTC is traded at this time
2.  People are irrational
3.  People panic buy

Sometimes forbidden fruit tastes sweeter.

But seriously, I was wondering today how much the surge in price over the last 24 hours is due to more people trading on Gox because they were forced there by the closure of other exchanges. I haven't thought too long about it but if you have more buyers forced into an exchange it could increase demand enough to raise the price. But this jump seems to be more than that. Another alternative is once we hit $100 all of the people on the sideline waiting for the green light decided it was time to get back on.

Fewer exchanges = bottleneck on supply = less supply per unit of demand = higher prices ? (just speculating here)


Also, the bubble/crash may not have been nearly as severe if it wasn't coupled with rampant DDoSing of MtGox and other exchanges--it may not have popped at all, we'll never know.

In my own case, I bought in during the previous rally at 57, and didnt sell before the pop. I bought at 57 with the hope of a 500-1000USD bitcoin. So to me, seeing the bubble go to 266 as rapidly as it did, drop to 50ish, and then continue on up to 120 (now) is to me a bullish sign. It shows me that I'm still in for a reasonable low, and it shows me that the entirety of the bubble wasn't just a pump prior to a dump...people are very willing to pay 100+ values for a bitcoin, and are making money doing so (if they have sells set in on the way up, as i do this time considering i didn't sell before the crash).

fundamentals are fine. what you described are called hiccups


let me put it another way. by the time it becomes RATIONAL the price of a bitcoin will be 10,000+

Which other potential disruptive and already established technologies can you invest in as an ordinary internet user these days?

If you compare bitcoins with a fledgeling tech startup its an incredible success. The evaluation is artificially depressed through some external forces. (Possibly early adopters with a few too many coins still?)

Bitcoins do is in some sense provide a chance at buying facebook shares in 2005, or Google shares in 1999, before anyone really knew what was going to happen. But bitcoins are also a rarely potent technology. The real question is why you would be selling, desperate for fast cash or highly risk averse perhaps?

for me, fundamentals are good enough for 300 USD/BTC. That's right now. It may change tomorrow, or in a month.

price represents the balance between the psychology and emotions of participating parties as a whole. Price goes too high, people stop buying and others sell. Price drops lower and buyers that previously thought it was too high become active. Of course there is also a time factor, people look at the short term and are have forgotten the $30 price of february, and will soon forget the $260 high.

I hold a diametrically opposed view.

It might be selective perception, but I see mainly good news and especially news with wide reach to untapped reservoirs.

Some examples (I could never give a complete list, no way to keep track of everything any more)

• Jeff Berwick constantly on TV in the states promoting bitcoin and his ATM. Great story!
• Max Keiser everywhere he is (Alex Jones, Russia Today,...) promoting bitcoin.
• James Turk and other metal dudes seemingly coming around.
• More generally: Mainstream TV coverage (e.g. colbert report), print coverage (I see german print media as an example falling over themselves trying to get a grasp on bitcoin). And not even negative at all despite the shit that happened (fork, mtgox engine lag, crash, bitfloor shutdown).

How could the price not shoot back up? We're not in a bear market. We suffered a very panic-driven hard over-correction and the rebound will be rather quick. Then we'll shoot past 266 to 450ish. Much quicker than most seem to think. My guess is In May or June.

Bitcoin is fundamentally a good thing and people know it.

Let me give you a little lesson in Bitcoin emotion.

It is very easy to list all the bad news, act as if it's the only news or is overwhelming, and ignore or not bother to find the good news. This is called "FUD" (An acronym that stands for "fear, uncertainty, and doubt.")

It is EQUALLY easy to list all the GOOD news, ignoring or not bothering to look up the bad news. This is called "irrational exuberance".

The problem is, with either approach, the severely biased "fundamentals" you present have bitcoin either (a) skyrocketing to over $9,000/mBTC, or (b) crashing to $5. Problem? Bitcoin is doing NEITHER at the moment!

So please, good people, consider the good news ALONG with the bad news, and let the debate be "does the good news outweigh the bad news or vice versa?" rather than "Here's all the [good/bad] news, why isn't bitcoin [spiking/crashing].

 :)

I'm sure people will come along and present decent amounts of good news, such as Colbert appearance (I list this not because I personally think it's "good news," but because it's a good example of how we can even debate whether a specific press item is "good news" or "bad news," see the Colbert thread for discussion), WU/MG announcement, a couple moderately-significant web adopts such as MetART and OKCupid, stats from various companies such as Bitpay, Gox, other exchanges, new exchanges, VC announcements, press, etc.

So when we have a realistic list of the significant good news ALONG WITH the significant bad news stored in everyone's mental RAM, we can have a legitimate discussion about what bitcoin might do in the future... rather than "Here's all my FUD/Irrational exuberance, why isn't USD/BTC tanking/on the moon?"

Bitcoin is going mainstream, really. If you only look here in the forum you only see a few faces, but there's a lot of people buying, and using, that don't even know of the forum. I was using bitcoin one year before registering in this forum. My mother is getting into it, maybe for use in silk road lol, and today, a great article on bitcoin came on a regional newspaper, explaining some of the fundamentals and how if it gets mainstream, it maybe will crash the fiat currencies(everyone here reads that newspaper) and I live in relatively unpopulated area in Portugal. Of course, the mainstream media isn't favorable to it, yet. But they will be forced to. Trust me, it's getting mainstream, volatility aside. The volatility means nothing, people believe it the same way. Satoshi is my hero  :D

I don't see anything fundamental in this list, which consists of anecdotal media references. I agree that media will continue to play the lead role in pricing Bitcoin. If any of the recent developments had happened quietly, without major press releases, we would still be hovering around $13.50.

I guess if there is ever an actual big piece of news, we can rest assured that the price would rise to astronomical levels. The Western Union non-news piece that moved us substantially was a virtual repeat of an interview that happened over a month ago. They've already said they're watching Bitcoin and may revisit it after it matures sometime in the distant future.

Many point to the types of charts listed below as fundamental evidence.

http://sourceforge.net/projects/bitcoin/files/stats/timeline?dates=2013-03-19+to+2013-04-19
http://www.google.com/trends/explore#q=Bitcoin&date=today%201-m&cmpt=q

I love the Bitcoin concept but hate (understatement) that it moves so erratically. I would love nothing more than to see high net-worth individuals begin utilizing Bitcoin in their portfolios......but it seems that we can only move in a bizarre and erratic manner based solely on press releases of little substance. I keep waiting and hoping it will settle down and at least pretend to be rational. Such low volume propels it into the stratosphere.

I am very close to giving up on Bitcoin, at least temporarily, as an investment vehicle. I may revisit it down the road if it truly attains fundamentals outside of the press release circuit. The media pump is doing more harm than good. I initially joined this forum to find out what everyone here was all about and have kind of been sucked into posting regularly, often regarding the over-exuberance (IMO).

If I am correct and we move down to rational levels and stay there for awhile, I will revisit Bitcoin. If I am completely wrong and we move up much higher and, for some magical reason, finally enjoy a modicum of stability (doubtful), I will revisit Bitcoin. If we actually stabilize here for awhile, I may revisit. At the present, there is too much risk to do anything with this.....I cannot gamble solely based on media hype and hyper-speculation. If we were much lower, it might be worth the gamble.

My main problem is that Met-Art, OKCupid, Bitpay, the VCs, etc etc, have become much less important than the accompanying press releases. If the CEO of Bank of America owned a single bitcoin and issued a press release stating just that, we'd apparently go to $10K.

https://i.imgur.com/Kfl6RSp.jpg

Hmm.

These are not fundamentals.

When we went over $100 last time I was a bear as the price was rising too fast and was afraid of the bubble.  However, I'm now feeling a lot better about buying at $71 and may buy more on the slow rise.  I think the new fundamental on Bitcoin is not its current use to buy and sell goods.  I think rather than just speculators we are now seeing a lot of people from Cyprus, Spain, other EU countries, China and Argentina putting money into Bitcoin as a safer currency.  This should help drive adoption in those areas and could continue to hold the price up.  I hope it doesn't rise too fast and create a new bubble. 

If people slowly start putting wealth in Bitcoin it will quickly start getting used more for international money transfers.  I'm still not a huge bull expecting $200 next week (I hope not) but, I do feel more confident now that it is becoming a safe haven currency.  During the bubble rise I was blasting BTC for lacking fundamentals but, this transfer of wealth has things looking better IMHO.

I would buy right now if there was a super duper easy way to buy bitcoins for the average joe. There's still tons of issues with bitcoin that need to be worked out before it can even think about going "mainstream" - and right now no one has provided a solution for those issues.

Right now everything is pure speculation and media hype. Things haven't changed all that drastically from 2011 yet all of a sudden it's worth over $100.

I think if anything fundamentally needs to change or currently is changing, it's liquidity. The wealth is getting spread much farther between people as more people are entering the market, which controls the volatility of the market. As this aspect continues to grow and we can see more buy and sell walls and no 50% drops or gains in a matter of hours, confidence to not bail so quickly will be in place and then we can start really worrying about the technical application prospect of bitcoin.

That is a good point and I think liquidity will get better with time.  Demand drives change and innovation.

You need to ignore the last value. The increase in interest has been increasing nicely. Ignoring the period of the price spike to $266 there has only been a small drop off recently, this could pick up again if the bitcoin price recovers sooner rather than later

https://i.imgur.com/cX75sXq.jpg

you mean how stocks, bonds, gold and everything else in the world goes UP and DOWN based on RUMORS, NEWS, PR ETC
i don't think you understand that is exactly how the real world actually works. not just bitcoins but everything
it seems you are confused

press release: Apple coming out with a brand new cool iPhone 6 that will change the world. so the rumors say- watch apple's stock price go up 10% without even knowing what the iPhone 6 even is.
^ example

That would be concrete news, not Western Union is considering the possibility of maybe thinking about reading up on what bitcoin is.

This.

agree, but the people who are listening has grown wider... I am one of them. These bumps of media coverage reach out and grab people's attention to investigate and participate, whether it's for speculation or for utilisation.

"The net is vast and infinite" (well, not quite).... Countries like Argentinia, China (with it's censorship), India, and so on all could individually suddenly have a massive impact if their tech centric demographic gets ahold of this story and runs with it in action.

BUT, for a wider adoption, it needs a better front end. It HAS to have a better front end. Maybe Ripple will get there first and cover that market, who knows.


I would add that things like the new exchange developments and the wider retailer adoption and so on are the dawn of something. So while it seems things haven't changed that much, the speculation on the change that is to come has.


(DISCLAIMER - this is uneducated speculation)

While news coverage is certainly the most ephemeral of fundamentals, several people in this thread are making the familiar basic error of confusing absolute growth with relative growth. It's like scoffing at the miniscule growth of a penny stock, from $0.01 to $0.03. "What're you so excited about? The price hasn't changed hardly at all. It only grew two cents!"

Same psychological error, different angle. Now I see why rpietila wants to price things in mBTC; it's a natural compensator for this human tendency to confuse the absolute with the relative (a very expensive error for investors).

$100-120 dollar per bitcoin is an extremely low price, it means it currently has a market value of just above 1 billion total and since this is a global phenomenon this is still a very tiny market. I agree it would be better to think and price things in mBTC so people can put it psychologically more into perspective. If the market matures and we assume around 1 billion people on the planet have and use bitcoins then the price could be as high as 200,000 dollar per bitcoin. The current price reflects that bitcoin is not even out of its diapers yet and that its future is still very uncertain. There are some positive signs on the horizon though, but there are also many hurdles left to take.

Things haven't changed, but people are waking up to the fundamentals (not news, I'm sorry I said good news were fundamentals above, it's not true). In other words: I think bitcoin was massively undervalued and still is. Why? Because quite frankly, most people don't understand how it works and the majority still hasn't even heard of it.

It's simply more people joining in, using bitcoins for store-of-wealth, medium of exchange, and yes: speculation.

what's wrong with blockchain.info wallet? It's at least as nice and easy to use as the ripple client and relatively secure.

I haven't used it so I can't comment. I didn't go for it as I thought, "online, unsafe" before I read too much into it.

As a non programmer and/or economist (or any related fields) I have found it's taken me over 2 weeks to fully understand enough of bitcoin to utilise it.


Jane and John who might use bitcoin to send money to Uncle Pete or buy food at the local pizza delivery or whatever, they want something that they can start using straight away... or as close to that as possible. I can only assume blockchain.info might not even do that for them?

It's very simple unless you've never used a computer.

what's simple? bitcoin, or blockchain.info wallet... either way I think you overestimate people.

If it's not made "for dummies" a whole chunk of society will be left out... It's very simple. ANECDOTAL EVIDENCE - Like when I was in a shop the other day and one of the managers was telling his staff member he now had a phone with "giba"... (yes, he had one gigabyte of data storage on it).

Exactly, and thanks for bringing this up. Price Bitcoin like a penny stock and the volatility will appear normal. Price it like a mature stock/commodity and "Omg $100 is so overvalued, the only things you can buy with it are drugs and child porn, [insert made up statistic like] 99.9% of all blockchain transactions are people buying drugs on silk road, and the price we'd need to support that is in the single digits."

Now, it's a quasi-commodity so we hope it stabilizes at a higher price, but it could be a while and folks who think it'll be "stable" at $2 are kidding themselves. If you confuse relative value with absolute value - prices moves of the likes of ($2 - $4- $1.50 - $4.20) are less volatile than $262-$50. That is what Litecoin has been doing for months now, actually, but it's far more volatile than bitcoin. Most of this price resistance is purely psychological.

A lot of people are holding onto their bitcoins waiting for the price to go back up to 200 dollars and even beyond that. All it will take is for several very large purchases to push the price up suddenly and a buying frenzy will ensue as people sitting on the fence try to jump in.

tl;dr Bitcoin is unpalatable to HNWIs (who account for the new Coinlab & Tradehill customers) because it is has the unique combination of being unregulated and very high risk, a bad combination for most portfolios. Lacks of these investors imperils the future.

Pricing in mBTC certainly wouldn't change my mind. I would be hesitant to buy Litecoins after such an enormous run-up regardless of the low price.

The risk is too great at current levels with lack of solid fundamentals. For BTC to be palatable to the wide range of investors that would be needed to make Bitcoin successful, with success defined as $10K to $300K per coin depending on the dream world to which one subscribes, it will need to be regulated by the CFTC (or something). Without the ability and ease to trade in a broad range of bonafide brokerage accounts (through legit custodians), and without some type of regulation for investors, the general public (and the 99.9% majority of HNWIs) will never be confident enough to purchase Bitcoin as as investment at current levels because wealth managers will scoff at the extraordinarily high systematic risk. And forget about institutional money directly investing in Bitcoin until it's regulated.

Because of these very large hurdles to success, IMO the odds of Bitcoin success are much lower than what most of you think. Whether one uses NPV, which doesn't really make sense because there are no cash flows, or EMV, which is probably better because BTC is more similar to wildcatting for oil, at $122 the math doesn't work for me because I see success as a truly infinitesimal probability (with a negative EMV). IMO there are several possible outcomes over the next couple of years, not simply success at $10K+ or failure at $0. We could meander along for awhile with constant hope of the next big development. But in the long-term, there are only two options..$0 or $??.

This makes it difficult for retail investors and the vast majority of HNWIs. I don't know many hedge funds that purchase lottery tickets as a business model. Lottery tickets are $5 (I believe??) and have 100m to 1 odds with a $100m+ payout. Bitcoins are $122 and have 1000+ to 1 odds (IMO) with a $10K potential payout. Even at a potential $300K per coin, just because there is a large potential payout doesn't make it a good investment because there is still the overwhelming likelihood of losing the investment. If you had $1M in liquid assets, would you invest $100K in lottery tickets that had a combined potential payout of $10M @ 1000 to 1 odds? I wouldn't, regardless of whichever method one uses to assign value to the investment. I wouldn't even invest $10K....or $1K.

What scares me about Bitcoin is that its price is fully dependent on finding the next round of investors, which at some point will be fully dependent on being institutionally recognized and regulated. The current price is the outcome of hoarding and speculation and has little to do with transactional volume. BitPay sells BTC immediately on the open market to hedge risk, so if current holders started making large purchases through BitPay it would probably make the market trend lower. There is no reason for someone to go out and purchase BTC to pay for something through Bitpay if they don't already hold the coins. Why go USD to BTC to USD?? BTCs success will be due to, in addition to making it palatable as an investment, its niche use in transnational transactions.

BTCs strength is crossing borders. It's weakness is that unless one already has a reason to hold Bitcoins (reason is currently mainly investment related), it is unnecessarily cumbersome and pointless to buy BTC that will simply be converted back into USD by the merchant (through BitPay) when making everyday transactions. So, in that sense, everyday use of Bitcoin within the borders of the US is still very dependent on it being accepted as an investment vehicle primarily because investors holding coins will be the ones using BTC to make transactions. This is one reason why BitPay adoption doesn't really excite me.

Stocks, bonds, gold, real estate, timber, private equity, etc etc, are all risky. But the investments are regulated, vetted, or have low volatility and fairly determinable risks. And unless one utilizes debt and leverage, illiquid assets usually have recoverable values. All-or-nothing types of investments are usually considered extremely high-risk (wildcatting, although wildcatting has much better odds) and is not something that the general public could/would ever get behind. The small gambler willing to put $500 or $1000 into lottery tickets may keep it pumped (is the best thing to keep it pumped), but will not sustain the full embodiment of Bitcoin a la $10K+ coins.

Who cares?  Bitcoin is not going to be used by people living in mud huts in Africa.  For now, bitcoin is for tech-savvy people.  It will get easier to use but there's a limit to how far it can penetrate, for the foreseeable future.  It doesn't have to take over the world all at once.

But its strength is transnational transactions. There is no reason for a tech savvy person to go USD to BTC to USD to pay for something in the US that is available in USD.....unless, of course, that tech savvy person already holds bitcoins as an investment. So, its transactional use within the US is subordinate to its use as an investment vehicle, although the press releases that highlight its transactional use serve to push the price higher as an investment.

It doesn't have to take over the world.....but it sure is pricing in a lot of premature success.

Perhaps. If that is the case, then IMO the likelihood of success is even lower.

You need only look at what bitcoin does better than anything else:  1) send money at almost no cost anywhere in the world, 2) resistant to attacks (whether by government, inflation, hackers, etc).

So yes, there absolutely *is* a reason to pay for something in BTC that is available in USD.  It is 2% cheaper, at least in theory.  Merchants accepting BTC do not have to pass on 3% credit card fees to their customers.  They may anyway, since currently almost no one offers discounts for cash. 

Cheaper in theory, but not in practice.....and much more time consuming. Merchants pass on the 1% fee that Bitpay charges and the customer is also liable for the foreign exchange risk in USD/Bitcoin. I see a reason for investors in Bitcoin who already hold coins to make purchases with their coins. But I do not see a broad need for making intra-border (US) transactions to convert USD to BTC to purchase something that will be converted immediately back into USD because the merchants cannot handle the exchange risk.

EDIT: This doesn't even include the spread, which is routinely 0.5% to 1% or much more (5%+) during periods of high volatility. Merchant prices for BitPay must account for current spread. So, if the entire transaction (USD to BTC to USD) was instantaneous.....1% fee from BitPay plus current spread of 0.5% or 1% is already 1.5% to 2%, minimum. This doesn't even include foreign exchange risk, which can be quite substantial, and the value of the additional time it takes to make these conversions.

EDIT 2: 99.9% of merchants cannot accept Bitcoin without BitPay because BTC is a volatile investment vehicle and merchants would not be willing to take on the foreign exchange risk.

And one reason I mention HNWIs as an important would-be driving force is because Tradehill & Coinlab are currently limited to accredited investors and businesses.

http://www.investopedia.com/terms/a/accreditedinvestor.asp

I do not know many (if any) accredited investors that would consider Bitcoin a serious option without some level of regulation, accountability or, at least, low volatility.