Bitcoin Forum

TL;DR: I won't be surprised at all if the bottom is at $30ish, and I consider it a sweet spot where to place consistent bids. I don't discard a bottom of $50ish, and I'm sure we will have a huge bounce from there, but each day that passes the case for a lower bottom is stronger.

----

During the bubble inflation, I speculated about a very bottom of $30ish after the burst. Why? Most of it common sense, plus some TA.

Some context: the 2011 bubble peak was $32, and then the price adjusted for a long time to $10-$15.

The situation was more or less stable (for BTC standards) until we hit $20 in January 2013, when Bitcoin made headlines in all mainstream media. I remember it clearly: "the hacker currency is now traded at $20", and thorough articles about how this currency worked followed.

Things started to get more steam, the hype machine started to move, and as soon as we broke ATH with almost no resistance the shit hit the fan: "Bitcoin broke ATH and its going up uP UP" was a big headline everywhere, economic supplements in mainstream newspapers took it to their frontpages, and the speculative madness broke through.

The week before the crash the price doubled, and the forum was bloated by both maniacs predicting $300k per BTC this year, singularities and so on, and people writing about how imminent was the crash.

A copuple of examples from the day before the pop:



Of course we were slaughtered and called trolls, but that was short lived as the day after (April, 10th) things went back to reality.

During the bubble inflation, I saw the following:

• People was buying like maniacs just because the price was going UP - the more it went up, the more they bought
• We were in a parabolic growth trend that was completely unsustainable
• Nothing had fundamentally changed in Bitcoin, apart a huge media exposure, which led to the speculative mania

Taking into account the above, I believed that the media exposure brought some people that is going to invest in BTC long term, but they are an obvious minority. Most of the "new people" is here for the get-rich-quick thing, and as soon as they see the price going down, they sell, which triggers more downtrend and the downtrend causes panic, more sell offs, etc - and there you have a contrarian, negative cycle that won't stop until the bottom is reached and a sustainable growth trend is resumed. Don't forget this was a bubble, and the same psychology that inflated the bubble will deflate it.

Then, there are some technicals like Elliot Waves analysis that support a $30ish bottom:

https://upload.wikimedia.org/wikipedia/commons/thumb/f/f0/Elliott_wave.svg/748px-Elliott_wave.svg.png

4 (bottom of second bubble) is usually very close to 1 (top of 2011 bubble). Plus, common sense indicates that once the speculative mania fades, we will benefit from an expanded user base that came following the media exposure, and this expanded user base could support $30ish as the pre-bubble user base supported $14ish.

After the pop I've been trading actively, looking at the short term (days/weeks). That made my "bottom prediction" dynamic, and for many months I was convinced the most likely scenario was a bottom of $50. Why? Because we had two consecutive ATH volume days just after the pop, hundred of thousands of BTC were sold, and this did not happen in the 2011 bubble, in which at the beginning the sell off was moderate. This was not the case for the current bubble, in 2013 the post-pop action was the highest we have ever seen in this market with two consecutive days with record volume. Therefore, we could argue that pigs has already been slaughtered, and the big sell-offs already happened.

Nevertheless, the more the time passes, the more I think that the cold-minded, pre-bubble analysis I did while I was just holding and not trading may still be valid. We had absolutely no support at $88 and $79, and bubble bottoms are always lower than most people think.

we must go deeper than the real price is (26$) so i call bottom at 10-15$ and there you can set your buy-in :)

Sure it could go that low, but a lot of people are thinking that and hoping to buy!

so you're trying to instigate panic by suggesting that the sky is falling. you speculate the floor to be lower than 50 but offer little to no evidence aside from a worthless charter, a claimed insight into the market data, and a shitload of hyperbole. i see right through your bullshit. people like you are the worst possible people for the public persona of bitcoin and long term stability of the market.

You're welcome.

enough threads about btc going lower blablabla.

look at ppc and trc and hedge your bets.

No, no he made a few quality posts he is immune against FUD accusations. He gets special treatment now. ;D

I agree, based purely on the amount of people who are giving you shit for saying it, who are clearly still holding in a market that is accelerating downwards. We have not seen anything close to panic yet - we will. And we are already at $72 without volume looking anything like that of a low.
It looks ugly.
Perhaps $50 for the expected big bounce and bull trap, and then quite a while later (weeks-months) for for the real low

more speculative propaganda. the price is low because the influx of regulations that just happened to coincide with the problems at mt gox, coupled with the uncertainty of the winklevoss IPO bullshit. a few weeks from now the price will be back up and all the gullible suckers you conned into selling at the current low price will be kicking theirselves for being so naive, while you count your stacks of crisply minted usd as you cash those wire transfers from campbx.

My view is that the bottom will be roughly the double of Jan 2013 price when the mining reward is halved.

Jan 2013 price is around $13.5, hence I felt price around $25-$30 is a very sustainable bottom price that can last all the way to 2017 when the next mining reward adjustment happens.

Personalyl I believe we are already at the bottom and its up from here

BUY

im selling bitcoins till price will get back to 10-20$

you are a 1st degree fool

sorry no offense

you sir are the fool, and are in denial. people are catching on to your game and its time to find a new way to make money. maybe get off your ass and get a job and quit scamming people on the internet

nice try ;D

wow, a clever retort. your parents must be so proud.

I'm not trying to instigate panic, as I said many times: you need to be a delusional fool to think that posts on these forums may talk the price up or down.

Then, why panic because the price of an asset is crashing? That's an over-emotional reaction that will be very bad for your investment. Just watch the trend and act accordingly


I really don't see why. I spread the Bitcoin word, I think it has an enormous potential to change the world, and I introduced many of my best friends to it, and they are all of them entering the BTC economy in one way or another. Some started to give me their money for me to buy them BTC (that started to happen at the end of March), and obviously I didn't buy a single BTC yet for my friends. I think I made the right choice, and I will keep waiting until I see a price that makes BTC again a good investment. That price for me is around $50 and below.


I call BS on that. The price is not low "because of the influx of BLAH BLAH BLAH". You seem to do not understand basic market psychology.

Why the price went from $14 to $266 in a few months? Because price goes up -> media says price is going up -> people hurry to buy -> price goes up even more and faster -> more people hurries to buy more and more -> WASH, RINSE AND REPEAT.-

Why is the price going down and will keep going down? Just because we are in a downtrend -> people sees the price going down and sell -> that causes panic and more selling -> selling causes the price to go down -> WASH RINSE AND REPEAT.-

Nothing more, nothing less. The "regulatory uncertainty" of BTC has always been there. If the prices were still going up, people would still be buying. Despite of all the good news about China, Cyprus (if that can be called good news), the Winklewoss ETF, Germany giving legitimacy to BTC... The price is still going down. Don't you see that the only thing that drives the price of a speculative asset, is precisely the price action and its current trend?

why did you have to get personal?

but can't you see that bitcoin would be much better off it you all shut the fuck up and enjoy the ride?

No, I don't see how anything that I can or cannot say may be better for Bitcoin. And, BTW, I don't think that an exponentially growing exchange rate is any good for Bitcoin. As I said the day before the pop:


And I still think it: before this bubble fully deflates, the better for everybody.

yes let's enjoy this ride guys its so much fun yahoo

you're missing an operand in that statement. before the bubble deflates, the better for everybody to do what?

Pretty obvious, isn't it?

Better for the people believing in BTC. Better for those who decide to enter the market, and do not have to buy at over-inflated prices during the top of a speculative mania driven bubble. Better for those who are building things for BTC. Better for everybody really interested in this experiment, its only worst for the get-rich-quick guys that invested what they couldn't afford to lose.

the only problem with that statement, is the groups you listed in bold are all the same group of people. you know exactly what i mean by this. they speculate the price low so they can buy at an extremely cheap price, then when the price is back up they convert to fiat and use it for their ventures. so i guess it does help in the long run, but its still bad for the public view of bitcoin. we gotta stop taking these shady shortcuts. otherwise its always gonna be considered a scam.

I don't see how "people building things for Bitcoin" (infrastructure, services, etc.) = get-quick-rich schemers

The get-rich-quick folks are speculators that want to press "buy" and then press "sell" when the price is x100 higher, and their wet dream is that will happen 3 months after they pressed "buy".

Well, they can keep dreaming. Luckily enough, Bitcoin is not a get-rich-quick scheme.

agree to disagree. i know what i see and its a speculative economy controlled by a 1% of users with greater than 75% of the currency. when they would like to decrease the prices they dump it, creating a lower floor. when they want the price high they buy it up. thats how i see it. the rest of us are just bystanders or unaware.

Submitted to the Wall of Fame: Quotes of Bold Predictions (https://bitcointalk.org/index.php?topic=193526.0) thread. You can {thank, curse} me later.

I think $20 is a fair price based on the January price range but I guess it could easily go lower.

Panic probably won't set in until $50 is broken or the bid walls on and above $50 are greatly reduced.

The one thing everyone should keep in mind is the millions of dollars recently spent on ASICs at BFL alone, not even counting the other groups.  Over the coming months those miners will be keen to recoup their costs if they paid with US$ (many did).  The selling pressure may be too intense and entice many to get what they can for their bitcoins.  Companies creating miners today have to convert their bitcoins to money as no chip or PCB maker takes bitcoins as payment.

Right now ASIC mining is profitable even if bitcoin falls to US$2 each, which it did as recently as late 2011.  I don't think it will fall anywhere near that as the price would be far too tempting for speculators.

I agree that many ASIC miners that joined the "gold rush" will be eager to sell ASAP to recoup their costs, which will lead to selling pressure throughout this year.

But, I disagree on ASIC mining being profitable at US$2 each. That's way off, with the current difficulty projects an exchange rate lower than $50 will make ROI  in $ very difficult for the vast majority of miners, at least for those that are not hashing yet.

As it happened in 2011, this "gold rush" will end up with people mining at a loss and/or turning their rigs off.

ha. i needed a laugh this morning.

Yup, I wonder what's the hash rate now.  The network hash rate page is no longer updating for 2 days.

I just switched off my mining equipment.  It was getting too hot with summer heat vs. what I get in return :'(

On the bright side, it's soo much cooler and silent in my computer room ;D  Ahh, the good old pre-Bitcoin-mining days! heh

resisting the urge to post a chart.... :D

you forgot the /sarc off

i launched one coin, and its far from a scam but nice try troll. now go fret and pout about your failing store that offers zero innovation and a bunch of 20 dollar shirts you imported from china at 21 cents apiece.

What is the fundamental difference between your coin and other Bitcoin clones?

aaand we'll have people dumping ASICs all over ebay

there is two: no subsidy halving. extreme low rate of production, only 10 coins per block

1.5 minute block targets 2400 block retarget. no matter how high or how low the network hashrate is, performance isn't adversely affected.

additionally the calls for the block height have been reworked. it calls the blockheight in reverse order. the result is the fastest loading and syncing client created to date.

don't believe me try it out.

http://nano.coinbit.pw

What's the fundamental difference between any of the alt coins and Bitcoin ?

well alot of them offer faster confirmations at the expense of security, although my coin does not.

I strongly disagree. The bubble popped just because all bubbles pop (otherwise it wouldn't have been a bubble in the first instance), and during the last week before the crash Bitcoin entered on a crazy parabolic growth that would have led to a 100% increase in price every week. That's unsustainable, you don't have to look for "external reasons" like MtGox incompetence, that kind of growth is a crash indicator because that's how market psychology works.

People sees their money doubling every 5 days, they get hyper-emotional, as soon as a deep crash happens for "natural reasons" (people selling to realize their profits) the herd panics and sell en mass, triggering the bubble burst. This is what happens over and over with all bubbles, you do not need to look for any "rational" reasons because the market is irrational.

the week before the crash you could withdraw from Gox. there wasn't no parabolic increase. it was just the normal recovery from the last bubble bursting. frankly you're point doesn't support your op any longer either. your argument about the bubble leads me to believe that the floor is 80

1) I've been able to withdraw from MtGox without any problem before and after the crash
2) How can you say there wasn't parabolic growth? I'm speaking about THE crash (April 10th, crash from $266).
3) The floor cannot be $80 because RIGHT NOW Bitcoin is traded at $75.19

This is still the same crash from $266, there's only been one crash so far this year and we're still only partially through it.

Exactly.

I am betting on around 45-47. That was the price the pre-rally plateaux occurred. If that does not hold, the next stop would be around 25-30 to resume the pre-bubble growth trend. Just look at the graph on https://www.bitstamp.net/
In any case it seems prudent to place small buy orders, starting at 70, evenly and impassionately spread along the way down.

lol at you thinking you can predict the market with any certainty. that crash subsided. i'm talking about the crash that happened when they pulled withdrawals at gox. you're just pandering misinformation/propaganda to suit your agenda. you're both high on meth with your conspiracy theories about a parabolic curve occuring in the market. again, this is a free market, it won't follow a curve. so what is the mitigating factor in the market? it s not some crash that happened half a year ago, its fucktards like you who keep running their mouth saying the markets gonna crash or the price is gonnna go up. you have no idea just how many sheep their are out there reading and buying/selling on impulse.

There is no conspiracy. Do you know what parabolic growth means? Its the type of growth we had just before the bubble popped on April, 10th.

There's nothing to conspire, that is a cold hard fact.

the bubble need to pop.  people need to suffer.   people need to get angry.  people need to quit bitcoin.  when that happens the market capitulates and we will find a bottom and start the cycle over again.  When BTC hits $50 I will be interested in how it handles the support there.  I will also be interested in how quickly it gets there.  I"m not sure if 50 will be the bottom because the market continue to evolve.  Maybe it is the bottom or maybe it is 30 or 20.  It is interesting to participate.

LOL, this is 'the' crash, any increases in price since the initial fall from $266 were just bounces along the way. They were big and people have been trying hard to keep the price up but ultimately it failed and continues to fail.

It you believe otherwise you're deluded.

It looks like it's going to be a full and complete deflation. Be sure to check back in a month or two to see how it turns out.

I know where my money is.

I just love how much AGGRESSION there is in this thread, towards the OP and anyone else who accepts reality.
 ;D

this is all based on your evaluation of bitcoin, everyone has a different opinion on its value - of course it's lower for big holders who picked up btc < $30.

It's the last stage of denial - 'tantrum'.  :D

http://s13.postimg.org/6jusr0biv/head_in_the_sand.jpg (http://postimage.org/)

 ::)

I see a lot of people commenting that weren't around from June 2011 to November 2011. Those were pretty dark times. It got so bad that most miners were looking at huge losses on GPU purchases and sold their miners, especially the Europeans who had higher electricity costs and the people on both coasts in the US. In August of 2011, it was briefly more profitable to mine Namecoins, so about a quarter of the miners switched to it and killed that coin (till merged mining happened).

The fact of the matter is that new ASIC miners can mine at a huge profit right now. Even at 200 [edit: million] difficulty, at these prices the ASIC miners are still making tens of dollars per day. The price has a ways to fall yet before it becomes rational again. You can pretty much mark my words, without a huge buyer out there to scoop up these coins, we won't see a new all-time high in USD price for at least a year. We either need large interest in Bitcoin (billions of dollars of investing) or for miners to start hoarding, and right now there is little incentive for either.

Of course, I say this as a miner who isn't selling his coin, but that's because I'm irrational and can afford to be irrational in the short term for the long term gains. Trying to call the "bottom" is too hard for me, instead I'll likely just mine and hoard as I can afford to, and sell in a little over a year as the market gets irrational again and I become more rational in response. There's some possibility that this isn't July 2011, and is actually the equivalent of February/March 2011, but given the number of folks in Speculation and on reddit that keep posting that 300 image of "Hold" despite the obvious fact that ASIC mining is far too profitable, I am leaning more toward the former right now.

Of course, always remember the market can be irrational longer than you can remain solvent, don't bet the farm on the success or failure of Bitcoin, folks.

Do you still hold you Bitcoin now it's trading around $67 ?

Yeah fuck it just dropped to 66

Denial can hold for some time, but when fear takes over the sell button starts to itch even to the biggest supporters of "buy&hold"

I guess we need those people to push through the big bid walls like those on $55 and $50

Just a trap. As soon as the order book is replenished of bids, there goes the dump. There's no more confidence in BTC price. People is starting to realize they need to extract from it as many $ as they can.

As soon as the price stays stable on thin volume or it goes down for some days, little by little, another dump will come, which will cause more panic, etc. there's absolutely no sign of a trend reversal yet.

A lot of people who bought at $50 or lower will be considering their options right now

You're absolutely correct, there's nothing new that hasn't happened already within the last few day's to show a rebound, it appears to be on a shallow downward slope.




Yeah, I know that I have...

Some buying pressure? A rally on decent volume, instead of this ridiculous sucker rallies with thin and declining volume we've seen in all the traps so far, since the crash of April 10th? The money flow on the exchanges order books starting to increase, instead of declining?

You know, the usual stuff.

Plus, we could see the tipping point approaching if there would be some real despair. You know, posts declining in this forum, articles on mainstream media about how Bitcoin may be dead for good, a failed experiment and so on... The kind of things that happen around the bottom of a bubble. Im not saying this needs to happens, but for sure there is no sign of trend reversal to be seen.

even stupider than the people who write this shit, are the morons who believe it.

Noted.

Believe what exactly? That we're going down, hard? That's a fact.

Or do you mean that bitcoin has failed? Nobody in here said anything to that effect.


As an aside: I noticed there's a noticeable divide between members of this subforum, those who take it personal if price goes down, and those who don't. The latter are not exclusively speculators (although certainly all speculators belong to that group), but they share the view that the market will determine the price, no matter what. And, yes, "the market" includes manipulating whales.

Of course, there's a third group: those who invested too much to not take it personal.

Very much spot on.

that's not a fact. thats an opinion. just because the majority seems to consider it a fact doesn't mean it is a fact. its subject to dispute.

Yesterday was higher, the day before yesterday was higher, last week was higher. Short and mid term, is going down. Dispute that.

stop acting smart, you and other big holders are dumping and causing panic - you're just hurting yourselves in the long term.

There's no one to be blamed. This is just the market going back to reality after a speculative illusion. People realized price is not going up and wants $ to pay for stuff. Or to buy cheaper coins and profit from shorting.

Bitcoin is very sensitive to speculation by design. This is true when the price skyrockets and when it plummets. Eventually, major adoption and enough liquidity will make it more stable, but as all commodities will always be prone to boom and bust cycles.

Stage 2, Anger (shifting blame)

Just read all five pages of this thread. I feel stunned at some of the comments. Those people are exactly why the denial --> fear --> capitulation phenomenon exist, and are a major source of profit for profitable traders.

$50 won't be the bottom. However, how big the $50 bull trap is will influence how hard the drop sub-$50 is. People who think this is a scare tactic are simply not thinking rationally, although it's almost disadvantageous to try to change people's thinking around since it requires people making mistakes in order to make money in a zero-sum system.

Very well said. I am almost convinced (a dangerous place to be so I have to stay on my toes) that 50 is not a bottom at all. We are going down hard and the volume just isn't there yet.
Guys should start paying closer attention to what Rampion, Blitz, etc. are saying as these guys and guys like them are bulls, but realistic of the current situation.

It is important to not confuse feelings with observation. In other words, don't let fear and belief guide you. Don't let loving BTC mean that you shouldn't sell when the chart say sell.

I'll just post this chart again for those who care to look as there are some obvious statements being made.

http://i43.tinypic.com/a082n7.png

http://s14.postimg.org/a2ngzq41d/generate.jpg (http://postimage.org/)

Just be patient =)

too early to go long or short, just wait :D

it's way too risky, even without leverage5 (!)

So we went from $50 may not be the bottom to $50 will most definitely not be the bottom? Don't see how you can be so sure of that, I think even 65 could have been the bottom although I estimate the chance to be 75% that we're going lower still after an epic bull trap the coming week(s). I wouldn't bet anything on it going lower than 50 though, it's possible but right now I don't see it in the market.

I don't care if you like playing casino. But next time, don't ask other people their opinion ::)

Even though things aren't looking good (price wise), you are pretty brave to short in an extremely oversold market and right on support.

Good luck, I'm sitting any bounce out for now.

bump.

Hi all the stupid bears in this thread....

I just want to say.... thank you

 ;D

...And we indeed bounced straight on the 200 day EMA, which is triggering what will probably be the biggest trap of this summer (see blue line):

https://i.imgur.com/IkMdopf.png

This is quite standard stuff, so I really don't see why you get so excited.

The fact that some of you are so emotional, calling names to the people that share bearish analysis, is just a proof that the market is fearful, or very anxious at least. Its like you think that us "bears" only want the price to go down. You are mistaken, 99% of the people in here wants BTC to grow, we are just acknowledging a trend and acting accordingly. Since April 10th, the trend is down - and its still is.

you guys talking about 50ies...    but we are leaving double digits for good...


http://www.quartetrecords.com/media/catalog/product/cache/4/image/500x/9df78eab33525d08d6e5fb8d27136e95/t/h/the_long_goodbye.jpg

The long term trend is up, and one of the things I've learned about trading is that it's usually better to follow the long term trend. Following the short term could leave you burned badly, but also give you great profits if lucky. Lucky being the keyword here. ;)

we've been in a primary uptrend since pizza

Based on what? This seems to me a trap, with a few positive signs for the bulls (rally on volume, etc.), but in no way is the confirmation of a trend reversal. The speculative mania phase is definitely dying (for now), so "back to normal" means that huge spikes are followed by big correction, and big crashes are followed by huge bounces.

Everything is playing pretty much as expected, I think that even the biggest bears expected huge bounces on the way down. And we are definitely on a way down since April, 10th.

You're trying very hard to convince yourself this is a trap but you don't sound as convinced as you were before. I think it could very well be a trap, but the case for a trend reversal is getting stronger by the day. Sentiment seems much better now, Gox issues have subsided for now and confidence is returning. My initial thoughts were that we were going to see an epic bounce up into the triple digits and then a gradual fall again until we hit a new low of 55-60, but I'm getting more optimistic now which I admit is also kinda dangerous. My initial plan was to sell 50% of my bitcoins when we hit triple digits again, but now that we got there I am getting second thoughts and want to hold on to them. What if this is a trend reversal and we did hit bottom at 65? The smart thing to do is probably to just follow my initial plan, it's never wrong to take some profits when you can.

Nobody ever went broke taking profits :)

Sounds like a wise move to lock in some profits. I've also learned that plans changed on the go are mostly costly endeavors. Especially when you become bullish when price just has gone up, or bearish when price just has gone down. Stick to the plan! I say to myself on a daily basis.

Agreed that changing plans "on the go" is a mistake 99% of the times. The fact is that we usually change our plans based on emotions (e.g. "what a rally, if I sell now I may kick myself if the price keeps rising!"), while originally those plans were established through cold and rational analysis.

It costed me a few lessons to learn that changing plans on the go is -EV

Rampion's analysis is some of the best I've seen, but everyone seems to be missing a critical factor.

BTC can decline simply from the flow of newly minted coins accumulating on the bid side of the ledger without anyone 'panicking' and choosing to unload long-held coin hoards.  The price of BTC very very closely follows the bid/offer ratio, any change of the number of offered dollars or number of offered Bitcoins has a decided impact on exchange rates.  Each day nearly 4K BTCs are generated (during these times of slightly faster blocks as difficulty is constantly trying to catch up), so unless ALL 4K coins are bought and permanently removed from that side of the ledger you will see a value decline.

In a broader sense BTC valuation is supported by ONLY the daily inflow of new dollars to buy up new coins.  E-commerce transactions have no real price supporting ability because dollars are just transiting through BTC at the volatile exchange rates with both parties buys and sells canceling each other out.  At 4K BTC a day we need to see $400,000 a day be expended to buy coins, the current bid depth of ~10 million can thus absorb about 1 month worth of coins, likewise the ~100K BTCs offered represents about a month worth of mining.

Now one must also consider that miners, particularly ASIC miners are in a position to 'pre-hoard' most if not all of their coins due to their low production costs (ware as a GPU miner at the margin of profitability is presumably selling more coins to cover electricity costs).  Also the typical ASIC buyer is hyper bullish on BTC.  So it is very likely that far less then 4K coins are even flowing into the exchanges and any sell off of BTC happening now are occasional profit takings from old retired whales or small holding non miners who have lost confidence.

At some point enough profitability is squeezed out of the mining that the option of pre-hoarding will end and we will see full liquidation of new coins, only then will we find the bottom.  And it will also be AFTER HASH TOP, as in 2011 the final stage of the bubbles deflation occurs after miners realize they have over extended and their hardware is no longer profitable and some of them shutdown.  Were no ware near the Hash top as it would be proceeded by a slowdown in hash rate growth, this is because of the inertia in the ASIC shipments and their high efficiency which means they are still profitably to run now (but probably not to order).  I expect the Hash top in 3-6 months and the ultimate market bottom ~3 months after that.

If difficulty keeps going up, that means there's less BTC/miner. This means every individual miner has to sell their coins for a higher rate as you noted in the first quoted paragraph. What I don't understand is why a miner will shut down, seeing as ASICs are at basically peak efficiency. They have to keep mining because no one will buy their ASICs from them.The only way they can recoup their investment is to keep mining. Why will they suddenly liquidate their coins once mining profitability is squeezed? I have to say, most miners are in this long-term as well. That's just in their nature.

There is at least 4.5X increase in efficiency available using industry standard processes over the 130nm ASICs currently being shipped.  150X current difficulty and these 130nm chips won't outproduce the electricity they take to run.

so the cycle continues,
people will again begin to spend less money on mining which means more money directly into bitcoin (not necessarily but likely)
generation I of asic miners will keep mining
until generation II+ starts mining and generation I will keeping mining, probably in a larger proportion than the GPU/FPGA miners are currently with gen I

either way, when difficulty increases, price will have to eventually follow given the greater distribution of bitcoin creation.  i don't see the logic in mining as a cause of concern for price dropping


so as miners realize they will make less and less per GH, they will suddenly dump for a loss after they realize that it is actually that much harder to procure bitcoins?

The "mining ROI is dropping so I'm better off buying" is a fallacy. Sure increased demand and lower supply makes the price shoot up in the short term but that is not sustainable and just leads to speculative bubbles.

It's like company layoffs, it might save them some money in the short term meaning higher profits, but it's usually sign the company is not doing so well to begin with...

Buying BTC and doing nothing with them does not create actual value. Value will come from having an economy built around bitcoin.

it is being built. by your logic you wouldn't have invested in google when they IPO'd because they kinda only did searches well, forget what they have in the pipeline.

buying bitcoins and doing nothing with them makes them more scarce and is a factor for increased prices, and the increased prices will attract people that want to provide something for bitcoins. it's self-perpetuating.

Declining profitability of mining presents a miner with three choices, stop mining OR continue to mine while selling most coins to pay for the marginal electricity consumed in mining OR mine at a loss and become a speculator.  Any earlier coins the miner may have hoarded are clearly separate and changes in mining profitability have no effect on decisions to hold or sell those coins.

The overall effect of declining mining profitability is miming becomes much more like REAL METAL mining, today most mines operate on very narrow profit margins and sell ALL their metal immediately (or even as futures), they do not hoard and speculate in it because its too risky vs their narrow margin.  This is in fact a good thing because these narrow margin miners create a very very stable supply of new coins entering, every day your getting 144 blocks worth of coins being sold and the exchange rate will fluctuate only because of demand side changes.  That's the behavior we saw during the low volatility year of 2012.

The combination of ASICs, the block reward reduction to 25 (which immediately cuts in half the flow of new coins and artificially doubles the exchange rate) and a media fueled bubble have destabilized all this and we won't know a stable price until all those factors have faded away.

Doing some quick calculations on when an 1st Generation ASIC (~100 Mhash/J) becomes unprofitable to run (aka marginal costs only, ignore all hardware).  Assuming a decline to $30 for BTC and electricity at 0.15 per kWh difficulty would need to reach 440 million, roughly 17 times what it is now or 4 doublings, at present it seems to be doubling every 2 months so I'm predicting 6-8 months for first generation ASICs to be scrap metal.

What are your thoughts about the sort of capital required to begin mining bitcoins vs the sort of investment required to begin a metal mine? Will Bitcoin miners get to the point where they sell immediately upon mining? Or will bitcoins be something people will begin to prefer to hold less expenses that are only denominated in fiat? I imagine that unlike gold miners, bitcoin miners do it not for a stable source of income but more as a side hobby, and are less affected by the relatively lower costs involved in mining bitcoins? If you mine gold, your career is in mining gold. If you mine bitcoins, you can still have a career outside that.

Anyways, the point I'm trying to make is that the people that mine bitcoins are doing it out of speculation. Unlike with the mature gold market, bitcoin prices still have a lot of room to grow. Our miners of all market participants will be expecting this, which is why your breakeven difficulty/kWh point for $30 doesn't mesh with the differing psychologies of bitcoin miners and gold miners. When your investment breakeven point for an ASIC is in the year+ range, surely any intra-month fluctuations are moot considerations if their investment scale is more in the 2-5 year range due to how they see Bitcoin's place in future dynamics.

This I call great analyses, thank you so much for sharing!

Probably the smartest thing on here. Finally found someone that thinks like I do. As an ASIC Miner now, I have two options, mine and hoard and sell a year from now, or mine and sell now, and hope to "catch" the bottom to buy back in. Additionally, I have the problem of infrastructure costs, as I need real estate and a facility to host the miners. Alternatively, I could sell the miners now and get some coin up front, which again, I can either hoard for selling probably close to a year from now as the price starts to go back up, OR I can sell it now and hope to buy back in when the price bottoms out.

Well, then we are at least three people on the same page. Impaler's analysis is 100% spot on, the mining bubble will have a profound impact on BTC/USD, and while ATM the profits for ASIC miners are still big, we are getting close  to the moment in which many of them will have to shut their rigs off, while immediately selling the generated coins to recoup a fraction of their costs.

Thanks for kind reply guys, it's nice to find some people with their heads on strait around here.

many many people went broke taking profits in the weimar republic.

Excellent fundamental analysis, I tried to formulate the same thoughts here https://bitcointalk.org/index.php?topic=188829.msg1957530#msg1957530

I think it's key to comprehending this bear market.

Isn't there some circular logic going on here?  You are saying unprofitable (or barely profitable) mining will cause selling and the price to drop, but then for your calculations you already assume a lower price to estimate their profitability in the future.  Probably has more to do with the timeframe since mining shouldn't be very profitable forever, but it makes the timeframe estimation a lot less sure, I think.

So we can expect price to double?

$30 is my estimate of a firm bottom for what the demand side of BTC can provide independent of mining costs, if you believe in a different bottom or indeed any other price just substitute that in the calculation and you will get a different estimate for when ASICs become unprofitable.

I think the train's taking off, we might never see below $50.

$30 sounds pretty good to me  :) .

Here's my contrarian argument against myself:
http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-09-15zeg2010-12-22ztgSzm1g10zm2g25zv

If you notice that chart, it's very similar to where we are now. Huge spike, then a fall, then a recovery looking similar to a "bear trap". Would you have invested at that point in time? GPU mining was just becoming a "thing", and software miners for GPUs were being sold. Yes, you read that right, people used to pay for software that could use GPUs to farm. For a brief time, they were the best miners, too.

Slush's pool had just started, with a whopping 600 mh/s, then rose very quickly to 4 GH/s. People were talking about how pools were going to be the "end" of Bitcoin, and ultimately lead to its demise. A large number of people were saying GPUs put control of Bitcoin into the hands of the "wealthy elite", and many lamented the end of a "democratic" block chain. Others were afraid of people using Bitcoin to donate to Wikileaks.

Anyway, this is all paralleled today. The equivalent of slush's pool is ASICMiner, the equivalent of GPUs are now ASICs, most people are worried about Bitcoin regulation.

Here's another chart from just two months later:
http://bitcoincharts.com/charts/mtgoxUSD#rg60zczsg2010-09-15zeg2011-4-10ztgSzm1g10zm2g25zv

Whether you bought at either of these two price points, within two months you would never be able to buy at any of the prices listed here again. Even in November 2011, Bitcoin only briefly dropped under $2.

While I am pessimistic on $50 being the bottom. It seems pretty clear to me that if it passes what is likely to be a wall at $120, we might start seeing irrational gains again, and we may never see sub $100 prices for coin again if enough miners start buying more and more units. The future mining difficulty is still in question, which makes pricing a solid bottom very hard. Assuming a difficulty increase to even 400 million, it is still profitable to mine under $100. But what if a difficulty of 400 million is vastly underestimating where we are going? What if we are going to 1 billion difficulty or more?

Anyway, I still think we could easily go back under $50, but I am not *betting* on it, so that tells you how soundly I believe that.

We are selfish and care about ourselves and our bank accounts (and food and shelter) more than we care about Bitcoin.  I will admit that readily.

But I will start buying to hold "long-term" at around $40 or lower.  The trend is clearly downwards since the bubble with lower highs and lower lows. 

I'll say though that the genius in the design of the protocol is that it takes that into account and takes advantage of it.

My personal estimate for the next low point in 2013 or 2014 has been $20 for a while. $30 would not surprise me, but single digits would also not surprise me.

Why? My model of the bitcoin market is that we have a layer of people who actually use bitcoin, people who pay with bitcoins for goods and services. But this layer is thin. I guess, if that were the whole bitcoin market, a bitcoin would carry a single-digit dollar price.

Above that we have a few layers of speculators. There are some long-termists who hold bitcoins for years, regardless of its highs and lows. We have some moderately slow traders. Finally we have the get-rich-quick crowd, some of which write their obvious "BUY!" posts here. They are trend-followers. (Buy, buy! The price is rising. - Sell, sell! The price is falling.) They create the bubbles, of which I expect to see a third one.

It is these latter ones that will now get increasingly nervous. As the price keeps falling, they will sell at a loss, in order to prevent an even greater loss. They will sell right down to the bottom, and that's how it should be, because they have no place in this market and are only damaging the bitcoin idea. Fortunately they will always bankrupt themselves. Unfortunately they will only make room for new speculators, until the entire world has learned its lesson. That will take a third bubble, and a fourth one, perhaps even a fifth one.

The problem for the better speculators, those who buy low and sell high and thereby stabilize the price, is to determine in advance where the price bottom after the last bubble will be.

I think it would be below $10, if it were not for the new, clueless speculators stumbling into the bitcoin market. They will start the next bubble before the previous one is fully deflated, and that is why it is difficult to predict the bottom price.

I am very interested in useful information and ideas that help to predict the bottom more precisely.

$20 - remember, you've read it here first, actually already months ago in some other threads.

accurate analysis of demographics in play