Bitcoin Forum

Well, theres a rally, and a crash... All I'm seeing is continued stagnation.

Yup, never been this flat for this many weeks. Statistically, a period of major volatility should follow.

At least it isn't Stagflation... Stagflation would be a bitch. (and kind of impossible with bitcoin.)

I've a theory that's probably worth as much as you are paying for me to share it with you.

But here goes.

About six months ago miners were getting squeezed on their mining -- the exchange rate was dropping and their electric bills were coming due.  Without an inflow of profit from mining, they turn to selling their entire BTC revenue and then also sell what they've accumulated.

This time the exchange rate is flat but the difficulty is rising fast again, causing the mining profitability to drop to levels not seen since early December.
 - http://bit.ly/HEzoMm

Now some of these miners are seeing the writing on the GPU wall.  And are looking to buy FPGAs.   So what they might do is use their BTC stash to cash out and buy an FPGA, or they might sell their rigs to another miner who maybe pays less for electricity and buys an FPGA or two with the proceeds.  The end result of that though is the GPUs return to mining with the new owner and new FPGAs get fired up as well -- causing profitability to drop to even worse levels.

interesting if this is true... price should easily move up making mining profitable again

We are just seeing free-market optimization at work again... Pushing out the miners whom are not efficient.
It also means for every small increase in the bitcoin price, we will be seeing a larger increase in the hashing rate.

I would suggest that also... we are only seeing bitcoins being sold at the rate they are being produced... not a greater rate. (don't sell you bitcoins, just sell your miners instead).

I think stagflation means "falling economy; rising inflation".  Bitcoin is certainly in an inflationary period; but then all indications are that the bitcoin economy is growing.  So Electricbees is right, we don't have stagflation.

The "impossible" note is true too once bitcoin is mature.  Even if the bitcoin economy falls then, there will be no central authority to pump newly printed money into the system.  So we can have "falling economy", but can't have "rising inflation" (eventually).

It continues...

Be patient. Rallies aren't built in a day.

What rallies need most is painstakingly prolonged stagnation and frustration beforehand.

So moaning about stagnation and convincing others that stagnation will continue eternally is the exact right thing to do here.

@mb300sd: Keep up the good work!

right after reuter's article on april second i proceeded to get more funds into exchange, dwolla says it should clear tomorrow

i don't expect to move the market alone but suspect many others probably have done something similar and expect their funds clear very soon too

There are probably just as many tired of their money sitting in such a risky investment who have or are taking it out after having made a nice ROI (anyone who bought before May of last year).

stable prices are a nice thing

Could it be the result of trade bots?

I think it's the result of short selling. Short selling can be a good thing as it is reducing volatility. See here: http://www.youtube.com/watch?v=zAkMhEqWFF0&feature=relmfu (http://www.youtube.com/watch?v=zAkMhEqWFF0&feature=relmfu)

Hmmm... that makes sense.

I guess those friends, if half-way knowledgeable, would rather be criticial of naked short selling.

http://bitcoincharts.com/charts/mtgoxUSD#rg150zigHourlyztgSzm1g10zm2g25zxzi1gCVolatility

http://www.floorvanderwal.nl/wp-content/uploads/flatline.jpg

Will we be getting sticky Bitcoin prices and wages now?

I hope Proudhon some day understands that "taking your money out" can also mean selling worthless fiat and buying assets like Bitcoin. In fact, I've "cashed out" of fiat many times.

One should not assume that Bitcoin is the temporary value-holder and that everyone who owns it is just waiting to cash out. For many of us, the cash out happened, and that's why we own Bitcoin.

Honestly, even if I had more to risk, I'm not sure if I would put a lot of it in something as risky as Bitcoin, particularly long term.