Bitcoin Forum

Bitcoin price is determined ONLY by supply vs. demand. Let's take a look at what that means:

1/3 of the 13.2 million coins mined are lost forever leaving around 9 million (call it the "float"), making the real market cap of BTC around $4.5 billion. BTC trades globally $20 million a day or %0.43 of that. A stock that has similar market cap is GRPN ($4.42 billion), it trades $100 million a day or 2.26% of that in the US stock market. More accurately, GRPN's volume average divided by its float (available freely traded shares) = 3.92% of shares are traded a day. Bitcoin has a daily inflation of 3600 coins or $1.8 million, which equates to about 10% of the daily volume or .04% of the 9 million available coins (this percentage gets smaller every day).

In terms of market cap, BTC is like GRPN in the NASDAQ. However, BTC has a much broader market, multiple exchanges, 24/7 trading, and it only trades 1/5th of GRPN's volume. For this reason and the way it trades, is why I believe BTC's effective "float" is much smaller than 9 million, with the vast majority in HODL mode and effectively out of the supply. This is the reason BTC has been able to sustain such a logarithmic trend. Also, whenever the HODLers dump after a rally, they are absorbed by newborn HODLers and the cycle repeats.

Effectively, BTC's available supply is tiny contrary to what most people believe due to the "$6 billion" market cap. In reality, it takes a small fraction of that to move BTC's price upward, and support is massive thanks to HODLers and wanna-be HODLers trying to accumulate. Every day that goes by and BTC fails to break ~$400 level support, the less likely it will and the higher lows that are put in place.

Lastly, difficulty has never overshot price by so much if ever and the price has never been under the average slope by so much. Along with many other indicators, after 9 months of accumulation (the longest ever) and news, BTC is in cheap territory right now. The weak hands have dumped and new HODLers have emerged as evidenced by an inability to drop below ~$450 for any significant amount of time. The effective supply of people willing to sell is shrinking every day, and I predict the next run up is within 2-3 months.


http://blockchained.com/chart_large_log.png

1/3 of coins are lost forever?
source? Oh you have none...

What if Satoshi and the first miners decide to start dumping? They must collectively have a massive amount of bitcoins.

they won't

Yeah that's a reasonable scenario  ::)

What if they get a bit strapped for cash?

http://onbitcoin.com/2013/12/07/bitcoin-spoilage-2-million-bitcoin-likely-lost-old-hard-drives/

It is well known that there are at least 2 million in untouched wallets with 50 btc in them and more that have never been touched etc. And you are right, they are lost forever until quantum computing is able to crack their private keys, at which point we would just switch to a new encryption.

Satoshis coins won't move until we have a working bitcoin economy - that is, until those who accept bitcoin as payment stop converting it instantly into fiat. And probably not until the bitcoin economy is mature. His coins can be effectively considered "lost" or "out of circulation" until we get there. It's a feature, not a bug.

Wow, very interesting article indeed!!
Thanks for sharing!

While I believe that there is a substantial amount of coins that are lost "forever", I also believe the actual percentage will get smaller with time. Back in the early days, people were much more careless because there was almost no value. These days, people are more careful about securing their coins because it would be a significant loss to lose even a few BTC.

And I also doubt that there are 2M BTC lost. Maybe immobile but not lost.

But the fact that those addresses have exactly 50 BTC each and they were never touched clearly suggests that at least a very good percentage of those 2 million BTC are actually lost (mined in the early days and forgotten)...

How many people would have mined 1 block only to give up? I would have to guess that those were (at least mostly) from one miner. Though I can't explain why they would separate them into individual wallets either. I thought I read that Satoshi coins were separated that exact way, so perhaps he has control over more than 1M BTC. In which case, I'm sure they aren't lost unless they were intentionally lost.

Also the number of btc "available for circulation" is a lot less than the market cap (due to lost lost wallets, hodlers, reserves, closed markets, etc...)

Nice article about the bitcoin scenario in this period, if the charts are right howlers are going to face a great winter time.

I hate that line so much. No, a massive % of the entire supply concentrated in the hands of one actor is not a "feature". Assuming we can trust Satoshi (ironic, eh?), it is at best "not a bug". That doesn't make it a feature. There is nothing good about this at all for a supposedly (hopefully someday) decentralized economy.

It makes Satoshi like the Bill Gates of the Bitcoin world.

Except Bill Gates spending every last Dollar he owns still won't cause the value of the USD to plummet.

Well, you made a nice argument with reasonable assumptions and comparisons. I don't firmly agree or disagree with anything you said, but it was nice to see someone engaging in a rational discussion in this sub. Unlike all the replies you got. Haha. What a shit hole this place is now.

Edit:
Perhaps the thread title was a little over the top, though. You're asking for it with that one.

I fantasize that Satoshi will release these coins in a democratic way (sms? mike hearn's passport thingy? facebook?)  when the time is right, thus giving the dollar a death kiss

You're assuming these coins haven't been lost.

High likelihood they have been.

RSI doesn't lie, bitcoin is officially and technically oversold

Edit: not technically but relatively oversold since scale stops at 50

http://i62.tinypic.com/efpjba.jpg

Are you serious? Did you just now read about RSI?
Below 50 only means the bear market is getting stronger. Look at the highs! It can become embedded for a long time not to mention that below 50 is not "technically" oversold until it breaks 30... I'd like to see a bounce off of 30 or a break above and a subsequent bounce off 50 on the top side to say the RSI is in good standing.

You can't actually see from that picture where the 20 and 30 lines are. It doesn't look like it's passed 30 yet, so no oversold. And some consider 20/80 to be better than 30/70, depending on time frame.

You are right i didn't pay close attention to the number. It is not "technically" oversold but this is a logarithmic trend and it has bounced off of this 50 level as it did twice before, so for BTC it is "relatively" oversold since that is the lowest it has been historically

I have  thought along similar lines in the past..even if we quibble about actual number of coins lost (not 30% but 20% or 10%) and the dollar volumes..currently at $50 million a day and not $20 million.... it is very likely that future demand and usage will increase over and above the increase in supply from mining and those selling after they reach their price "target".

- Businesses like bitpay have a target of a  33 fold increase in merchants by end of 2016 from 35k to 1 million.

- Xapo  not even 1 month old, has potential to have 1 million business/travelers use their card within 12 months ( as barring $/bitcoin exchange rate fluctuations it is cheaper to use for foreign currency transactions compared to traditional cards and much cheaper if the general trend of bitcoin price is upward ( which it still is))

- The un-banked/under banked = 2.5 Billion. These people are interested in having card options as its easier and cheaper for many products to buy using cards on line ..just capture 1 % of that market of which 88 million are in the USA

- remittance sector..$450 billion / yr....current rates using bitcoin are about 2-3% total to remit abroad including echange rate conversion...traditional services are 3- 10 % but in parts of Africa its 30% +..a large part of that market can move to bitcoin over time.

Payment sector like dish/utilities is massive.

http://www.mckinsey.com/insights/financial_services/counting_the_worlds_unbanked

http://www.forbes.com/sites/darden/2014/06/05/fighting-financial-exclusion-how-to-serve-88-million-americans-who-have-no-bank/

Add all that together and it is huge..its not here yet but so many industries are working toward that and will succeed and at the current pace it will be soon.

Supply and demand, literally everything.

WHat we need is merchant addoption, merchant adoption is literally everything.

yes, but this has short term bearish implication, as there becomes new ways to "cash out", often without having to worry about capital gains.

the volume has really dried up now, this is the calm before the storm