Bitcoin Forum

The current buy support that needs to be dumped on to reach the recent low ($381 at Finex and $378 at Stamp) on all major exchanges (Bitfinex, Huobi, Bitstamp) combined is currently roughly 8'160 BTCs (look it up yourself on the depth chart at Bitcoinwisdom), which is the equivalent of the total of BTCs mined in two and a half days (8'160 / 3'400 (BTCs mined a day) = 2.4 days)

And we are here after huge price drops, with little bounces, with this little buy support, out of which some of that looks like buy walls from single entities that could pull them whenever they feel like it (already seen that quite a few times).


Where is the real support?
A couple of thousand BTCs at each major exchange doesn't look like strong support...
Very few people are buying directly from the asks.

Currently it looks like there is too much $ worth of supply at the current price for the demand that there is right now.

Currently, honestly speaking and putting the kool-aid aside, I don't see the fiat required for a new bubble, a new decent rally, or an uptrend whatsoever...

What are you guys thoughts?


PS: I didn't include OKcoin in the calculations because bitcoinwisdom doesn't let me see more of the depth chart, but it wouldn't change much anyway...

OMG. Imagine what will happen when they dump bitcoins mined for seven consecutive days. And what if they dump all the mined for a whole month?!
Oh no! We are going to $0! Panic mode ON!

http://media-cache-ec0.pinimg.com/236x/81/b2/fc/81b2fc521b4b795b7ea30f723c8e53e7.jpg

 ;D

Wanderfromthenorth, I'm afraid that if you are looking for some objective discussion on this topic, you're going to be very frustrated trying to find it here.

I know that as a long term bull, I have been.

The perma-bulls just want to keep shouting "Relax, everything is fine, buy buy buy! You really don't get what's going on!" in a very callous, condescending manner.  Without any discussion or evidence backing up their reasoning at all.  Or they continue to shout "Bitcoin is still up 400% from last year!"
Reason: They just don't fkn know what the market is doing right now, and apparently don't care because supposed 'cheap coins'.  But cheap is completely relative month to month. Never mind the fact that there doesn't appear to be much real support at this level, and previous support from May @ $420 has been broken.  And nobody that bought since Jan 1st. really cares what the price was last year, at all.

The bear-trolls, well, they're just as useless.  The above post is a clear example.
Reason: Because the trolling has gotten so bad here with throwaway accounts that it's virtually impossible to separate the true trolls from the objective bears.  And some of the object bears that I might have listened to in the past have completely disappeared from this forum of late.

So what are we left with?  Yourself.  Just listen to your own intuition, buy if you think we're close to the bottom, or hold off if you think we're going much lower.

3 months ago I would have concluded that where we are currently is the bottom.  But now I just don't know anymore, and the whale traders seem to absolutely not give a shit.  They will dump this market into the ground if it suits them.  I'm just hoping they will eventually stop when they've had enough and can't find any more real buyers.

I think that miners create to much of a downward pressure, so btc will be bottoming until then next halving. Before that happens we might see some more short term spikes though.

It has nothing to do with the newly mined coins. Really annoying hearing people spout that nonsense.

Like, totally!

I mean, how on earth could an increase of the monetary base by about 14% this year lead to a lower evaluation per unit if insufficient speculative or usage-driven capital enters the market to counter that inflation.

What a preposterous throught.

One should consider the invisible fiat not on the orderbooks, the USD in transit from banks to exchanges. The whales/penguins and fish who sold and waiting to buy back once the technicals align..What happens if Tim Draper's pal decide to put in $10m ?

So now we're banking on supposed invisible/non-existent support money, and what ifs about who is going to invest in the near future?  Really?  How about we look objectively at what's happened in the market over the last 10 months instead?  How about we consider the mood of everyone that has tried to get involved in bitcoin since Jan 1st, and what they might have told their friends and family about their experience so far?


Stop wasting your time trying to think objectively and rationally, Oda.  This sub forum doesn't have the ability or even common sense to debate with you.   ;)

The other thing I keep hearing is that "Bitcoin daily transactions are actually on the rise!"  I guess no one would consider the fact that this is the acceleration of selling transactions as opposed to buy and hold?

It didn't happen with the usd denominated bonds, so why should it, in bitcoin?

Some good points there. Increasing transactions and a growing user base are usually touted here as bullish fundamentals. There's a flip side to everything though.

Because USD is the world reserve currency, and USD bonds are in demand.

Bitcoin is the worlds cryptomoney reserve currency.

FUD!  

http://aysetatileciksin.files.wordpress.com/2012/06/casus-olabilir.jpg

Already answered, now in bold.

(The same old disclaimer as always: no, I'm not a "Bitcoin skeptic", or "perma bear". Just pointing out a possible, quite likely in fact, reason for the long price decline we're seeing.)

The point is, the mining of new coins is not causing the drop. Proof: last year new coins were mined at the same or higher rate and the exchange rate increased. New coins create downward pressure but that effect has existed since the dawn of bitcoin.

Last year and in previous years, Willybot was still in business. With Gox gone, Bitcoin is now trying to find its true price, which is somewhere in the double or single digits. There won't be another rally without some Willybot-like entity manipulating the price and leading the way.

Alright, I'll paraphrase: There is a strong pull downwards by the inflation inherent to Bitcoin's emission phase. Without major influx of new capital, this will greatly depress price. It appears that this year the influx of capital is not sufficient to overcome the downward pull from emission.

But I suppose your question is: what is causing the reduced influx of new capital, compared to 2013, for example.

Appearances can be deceptive. All we know for sure is that on exchange there are more bitcoins for sale than buyers at the moment. Bitcoin's inbuilt inflation is decelerating with each block halving yet the price has risen throughout that time with bubbles and bursts. Why is this any different from before?

This is starting to remind me of those discussion with jorge, when he wants to find out the definitive "reason" for each rally or crash :D

Keep in mind, I believe that technicals rule the market, or maybe the slightly weaker claim: market sentiment (which doesn't require external reasons) heavily factors into the interpretation of the fundamentals, to the point where it makes sense to say "technicals rule the market".

So, the answer is probably somewhere in between cyclical market sentiment, professionalization of mining (with higher ratio of coins sold vs. coins held),  professionalization of trading (with more emphasis on short term profits), lasting negative influence on user confidence from mtgox failure (something that this forum is very reluctant to accept, imo), and uncertainty if growth of user adoption is accurately captured by an exponential growth function (I know, hashrate very clearly is, but that's not the same as user adoption).

Sounds about right Oda. Neat summary.

Do you realise that the Bitcoins mined daily 2 or 3 years ago (and same last year) were worth (in $) a lot less than what they are worth today?
If the BTCs mined every day are worth $5 each instead of $1200 or $400  A LOT LESS of $ worth of buy support is needed to sustain or increase the exchange rate.

Right now 3'400 BTCs are mined every day. That's the equivalent of 1.3 million $ every day of buy support (new money) that is needed to just sustain the current price.

Of course miners don't just dump all the BTCs as soon as they are mined every day, but that's beyond the point. It's just more and more supply that is being created that at the current price makes for a quite a lot of money (for the BTC demand BTC that there seems to be right now that is) needed to sustain it.

Exactly.

Agreed.

Bingo.

Yes a lot of trolls in here, but some people like you and oda etc can be constructive to talk to as we can see.

I have the impression that a lot of trolls here call themselves "investors" but they don't seem to care much about trading (because they are convinced"daytrading is just gambling") or the dynamics that rule the price, demand, supply etc. If they are not interested by those aspects fine, but at least quit the trolling  ;D
I think they should try to inform themselves, because it's not rocket science and they could learn something new as with anything.

My personal feeling as a broker: The amount of capital buying bitcoins from me have increased 3X since last summer, but the price has increased by 4x, so there is a little bit room for downside movement, not too much

There is certainly not 1.3 million dollars coming in every day, yet the price doesn't crash to the ground. There doesn't have to be x amount of money injected into the market to support a particular price level, that's not how it works. Market price is what buyers/sellers agree on at one point in time, nothing more.

the mtgox fraud plus chinese speculator push prices to unprecedented levels.  the deflation will be long and painful.

other than speculative reasons, there's little incentive for the average joe to buy BTC - traditional fiat / credit card is still superior as a payment method than BTC at the moment.

I suspect the price will continue trending down toward the current cost of mining absent buy pressure driven by news or market manipulation.

Current mining bubble is arguably the result of investment made 8-10 months ago

I also agree with you on the sentiment that you can't just reduce a complex situation to an almost binary statement such as "mining is the cause".
This is almost as bad as "it's the gox coins, it's exchanges manipulating, it's the government".

So the supply of bitcoin is increasing around 14% a year at the moment? If during that time bitcoin adoption grows by 14% the effect should cancel out.
Also why is it always assumed that the coins mined are immediately (well, after maturing of course) sold?
You'd think that a reasonable miner would try to get the most out of their coins if they wanted to sell them.
Dumping bitcoin to the ground is a totally counter-intuitive move (let's leave out the conspiracy theories of miners trying to force others out of the business).

I don't know a lot about trading but from what I gather shorts are up significantly at the moment.
It is the general market sentiment that things are bearish so people try and profit from that.
This sentiment can and is creating much more downward pressure than miners could ever make

I am sorry but in this case Wandererfromthenorth is right. If we consider miners' profitability, and estimate mining cost of one bitcoin to, let's say, 300$, it means that 75% of daily supply must be dumped or miners gets on red.

The monetary base of bitcoin is fixed, only that all coins have not been found yet. They are there, somewhere in the integer space.

It is fixed as a point of convergence more than 100 years into the future. Which is more than the life time of even the youngest market participants right now. That's 'increasing the monetary base' for all practical considerations of a market participant.

Not indefinitely, of course - which is the "sound money" promise of a Bitcoin future. But  until then, it's inflation all the way.

This model in which Chinese buy BTC directly from the miners in order to get $ out of China by dumping on foreign exchanges
is not just bearish, but worrisome for the future recovery. Eventually the Chinese authorities will stop it and seller pressure will lessen.

It depends on what you mean by "adoption grows by 14%.

If 14% more people learn about Bitcoin this year, and each one bought just one Satoshi, that doesn't do much.  And simply spending 14% more $ doesn't do much either--BTC price has quadrupled since a year ago, so what's needed is (14 x 4)= 56% more fiat.
Oversimplified, but you get the drift.

Whatever the direction, things are going to look very different one year from now. Either we'll hover arround 50-200, or at 10-15k. Has anyone calculated the necessary bitcoin price for today's use excluding speculation / store of value (which is mostly black market, I imagine)?

What I meant is that if the bitcoin economy as a whole grows by 14%, not user adoption counted in individuals.
The point is that as long as we have real growth of over 14% per year you can neglect the additional coins from miners and price comes down to speculation and usefulness and of course more scarcity if we do grow over 14%


[edit] with all the talks about fake volume on chinese exchanges etc it would be really interesting to know solid facts.
As much as Jorge is trolling he does raise some points when it comes to that. All it takes is one big exchange to "tweak" the charts and the sheep (in this case the traders ;) ) will follow. Looking at the gox fiasko in hindsight really makes me wonder how much trust I should place in the markets. Either way I see miners not as a major driving force for price.

That's the question amorous cow-herder asked a while ago. (https://bitcointalk.org/index.php?topic=775126) The summary of my answer in that thread is:

That question is nearly impossible to answer, because BTC is de facto used as a store of value by some early adopters, but at the same time, their decision to use it as such is motivated by the, ultimately speculative, assumption that BTC will succeed. So, in my opinion, the question what is the purely "non-speculatve value" per coin can't be answered because usage and speculation are not entirely separable.

If the question is, what is the current value purely motivated by transactional usage, then based on my very, very back of the napkin calculation in the thread above, I don't see current commercially motivated transactional volume at much higher than 1 billion USD per year, which together with some conservative assumptions about velocity of money and free float available for transactional usage, leads to a value below $100 per coin.

Btw, I don't think black market usage is still as dominant as it was two years ago maybe, but it probably still makes up a relevant share, together with a portion of BTC denominated online gambling. Very crudely again I'd say gambling + black market add up to less, but not much less than 50% of total commercial TV.

Big fat disclaimer: I'm not saying "that's the fair price for BTC right now".  I'm just saying that this is the result of my calculation which coin price is necessary to support current commercial transactional value that occurs on-blockchain.

There, fixed that for you.

I did read your story, and it is really sad what Banks did to you... but with this attitude you will be losing money again but this time it will be because of Bitcoin...go figure. 

His thread actually started one of the few worthwhile discussions in the last weeks, imo.

LLook in mirror! troll is you!1! /doommeme

+1

I think we're saying the same thing, I simply reduced "real growth" (which is difficult to define) to a simple statement:

If the price of bitcoin has doubled over a year, the influx of fiat needs to increase by 28% to negate the 14%, or:

Influx_of_fiat_today = Influx_of_fiat_{one_year_ago} * (Bitcoin_price_today / Bitcoin_price_{one_year_ago}) * 0.14

(or something--coffee's not kicked in yet)

Seriouse problem here if true.

Non tech savy people(majority of the world) selling bitcoin because short term profit isn’t happening any more. These people didn’t believe in the potential of bitcoin in the first place.

Libertarians and the like(much fewer) holding bitcoin because of their beliefs.

Adoption of bitcoin from people who see its value in decentralization and its unregulated nature is growing, but it is very slow and steady. These types of people don’t care(maybe a little) what the price per bitcoin is, they just care about its ability to be decentralized, inflation proof, etc.

The price is going to keep falling until all the sceptics, non believers, and sheeple sell their stash of bitcoin.

I am a strong beliver in bitcoin but I do think the price is going to keep falling for a while but I also believe it will never go to $0.

THIS IS JUST MY OPINION.

The price is crashing because the common folk (the 99% sees Bitcoin as "some rich people thing"). And they see to much of a hassle to enter Bitcoin, just to do what? You buy Bitcoin with your hard earned FIAT money, go through the hassle of getting accepted in a exchange and what not.. then you get your less than half a BTC (this is what the 99% can buy at best case scenareo)... what the fuck you do with it? How does this improve your life in any shape or form? Let's be real for a second. The only people that has gotten beneficied from BTC have been the guys that own BTC since the early days. The life of the 99%'s will be absolutely the same post Bitcoin. THIS is why the price is tanking. Something cannot live forever off whales.
Unless there is an easier way to make BTC besides risking your FIAT wageslave money, this is going to keep going down.

And how, exactly, is Bitcoin "inflation proof", when 3600 new coins are created every day, most of which are dumped onto the market, pushing down the price?

Meanwhile, the hated US dollar is stable and liquid. Indeed, most fiat currencies are stable and liquid (and usable) compared to Bitcoin, which is failing and has reached its twilight years.

My background is libertarian political theory, and what I really really have enjoyed in my 20 months running along beside The Crypto Thing is the fantastic way the 'landscape' has kept changing. No sooner do you hammer out one hesitant Theory of It All than some upheaval puts it on the scrapheap.

Mark (IndiaMikeZulu), Australia

Sorry. I was a bit confusing. What I meant to say is a fixed and predictable inflation rate. Unlike govts. ability to alter inflation rates. Just think about Zimbabwe's inflation.