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.

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.

Right? This was essentially a rehash of a similar interview over a month ago, nothing new here. He basically repeated a similar statement and BTC shoots up......

Surprising how fast the euphoria returns.

See, the media pump is on. Western Union/MoneyGram simply mention 'Bitcoin' and BTC it goes haywire.

MoneyGram's senior vice president of U.S. and Canada says, "But we've not committed and don't have any imminent plans to announce anything."

This is a rehash of old Western Union news. They mentioned this over a month ago. They basically repeated the same thing in a new interview and apparently it's a whole new world for Bitcoin.

Yes, poor infrastructure is holding it back....but it's more than that. This forum exists in a tiny bubble. I feel like it's difficult for many of you to see outside of this bubble. The main reason Bitcoin needs real infrastructure is to give it legitimacy. The only way there will ever be true mass appeal is if the process to buy/sell bitcoins is seamless (getting there) AND it has legitimate backing by the types of entities at which Bitcoin was invented to thumb its nose. This may allow the general public to buy-in.

Bitcoin needs Wall Street and/or the large elements of the financial community. This grassroots effort will stall at some point without the involvement of serious forces.

Of course this exchange can be manipulated. The 1920s NYSE was manipulated massively and it had a much higher relative market cap. The NYSE is highly regulated because of a full range of shenanigans that occurred in the past.

http://en.wikipedia.org/wiki/Market_manipulation

There have been allegations of phony volume or churning at exchanges/brokerages more recently than the 1920s....

http://algotradingindia.blogspot.com/2011/09/fake-volume-at-united-stock-exchange.html
http://www.business-standard.com/article/markets/sebi-warns-use-on-negligence-112051200011_1.html

I haven't been watching Gox lately. In the past I have certainly noticed bizarre pricing behavior. The wheel need not be reinvented, these types of things are as old as the exchanges themselves.

Also, VCs getting more involved means that their buddies in the media might start pumping this a little harder in the future. IMO The Winklevoss news was clearly a timed release with an intent to keep the price from falling further. The media could begin playing a bigger role in the future. They accidentally pumped it previously. In the future there will likely be more intent.

This should be the start of a multi-year bear market. We have no fundamental reason to go up substantially anytime soon and should trend downwards.

But, we may have another media hype cycle on the horizon. Because this is driven entirely by the media, I don't think we can hit single digits in the short/medium-term. I see potential for more speculation before things get dire in the market because everyone is waiting for the next big news cycle. If nothing materializes we will begin to move down a little later than I had anticipated, IMO. I did not think the price would hold up this well, although we could/should still retrace the recent lows.

I see further adoption and development of Bitcoin, so in that sense I am 'bullish'.....but the long-term trend is a complete divorce of fundamentals and pricing action. At some point, this deviation will be rectified (likely lower). Even with new infrastructure, the price will have to go down once reality takes hold. The general public and most analysts will never accept $10K BTC. They may temporarily accept Bitcoin as a vehicle for speculation in hopes of more big news. But once the big news has finally all been factored, we will see wholesale dumping from which we won't recover. This could happen years from now, I suppose.

I suppose there is the tiny likelihood that Wall Street picks this up as the next big slot machine. That is what will need to happen to actually pull this whole thing off. It will never come through adoption (although adoption can keep Bitcoin alive for a very long time). The full embodiment of Bitcoin will require serious backing. I suspect this is where some former bears are deriving their newly found bullish outlook.




You have obviously never written a graduate level paper.

http://en.wikipedia.org/wiki/Irregardless

'The definition in most dictionaries is simply listed as regardless (along with the note nonstandard, or similar). Merriam–Webster even states "Use regardless instead."'

Awesome.

News flash, I hold bitcoins. I can hold bitcoins and not be delusional.

I don't think you're crazy, but you don't put forth any kind of argument other than 'I am protecting my money' and 'I can buy cars and houses with bitcoin.' You think it's going up because that's what it does. Fair enough.

I am medium-term bullish on bitcoin but do think it's grossly overvalued.....and do think it may rise and continue to be overvalued despite fact that it should trend lower. I am willing to profit on this over-valuation, but I am not willing to become irrational because of it.

In this religion, however, I suppose it is heretical to make those kinds of statements.

And before one calls others ignorant, one may want to stop using words that don't exist (irregardless). Just a thought.

EDIT: I actually don't see it rising much anytime soon. I still think we could retrace.

No, not a scam. They simply woke up to the fact that it was bizarrely overvalued due to market action of a classic bubble.

Of course it has worked. It has gone up in value. If making money is the goal, one can make the most money when pricing action is completely divorced from fundamentals.

I'm not concerned with a restatement of the obvious. The people who held because 'this is working' got burned a week ago. I was one of the lone people on this forum warning of an impending explosion. So, I guess that worked for me.

I'm interested in how long this can be divorced from fundamentals. We will likely have another news hype cycle coming. I simply wonder at what point the news cycles will have diminishing returns. Once we have major adoption by businesses and everyone is sitting on their bitcoins, 'storing value', while businesses are not really transacting very much, then what happens?

Even with major support at the exchange level, I have a feeling the public and most analysts would still look at this with extreme skepticism despite the fact that the headline would push it higher. And even with new exchanges and infrastructure, I do not see a major buy-in by the public anytime soon because they are skeptical of the investment 'store of value' just as they are skeptical of financiers and bankers. So they would be highly skeptical of that combination although it would make for a wonderful headline.

If Bitcoin is designed to rise to eternity, it will be quite some time until people actually start using it to do business in a meaningful way. Pricing is destined to be completely divorced from fundamentals until it fully fails or succeeds.

....and businesses are using Bitcoin adoption for their own advertising purposes. It's a good press release for them as well regardless of how much business they receive from the adoption. It's great for the first two or three sites in any given niche. I doubt the fifth or sixth dating site will release anything.

It will be nice to get past the headline bubbles and focus on fundamentals. Unfortunately, I don't see that happening anytime soon. The next big headlines will likely be exchange related.


As a store of temporary transactional value or as a store of long-term investment value?? No, I think everyone is using this as a store of investment value, investment value that is highly dependent on headlines. As a store of temporary transactional value (simply to make purchases), we would have a very different valuation.

People with any sort of tech literacy have heard about Bitcoins at this stage. I have friends in Argentina that are not the most tech literate and they certainly know about it. Anyone who may actually use it anytime soon knows about it.

It's difficult not to flip-flop when it comes to the valuation. Predicting pricing action has very little to with fundamentals. It's all about the perception of fundamentals and predicting whether or not there will be another wave of speculation based on headlines. If all of the business that now use Bitcoin had quietly adopted, we would not have seen much of a stir in the price.

If a wave of new buyers is coming in, it is because they think there will be a successive wave of buyers based on upcoming news and announcements and they are still getting in relatively early. It has nothing to do with the number of downloads, companies using Bitcoin, widespread adoption, or any new deep level of understanding of Bitcoin. It has everything to do with the fact that there could still be a news release around the corner that can propel this higher vis–à–vis speculators.

I've been surprised by recent pricing action. Everything tells me that this should trade sideways to down over the next few months. But....it's not the new adopters that are setting this market. It's the new speculators, I suppose. And I suppose that regardless of the fundamentals, for the foreseeable future there will be the allure that some big news story might propel this into bubble territory again. We should retest $50 but I'm not sure how soon/if this will happen.

I won't disagree with you. Things will get interesting. I was hoping for more doom and gloom first.

Most on this forum acts as if it's black and white (bulls vs bears). I was extremely bullish at $13.50 due to imminent media coverage. I was extremely bearish over $145 (even though I realized and posted that if we broke $145 we were headed much higher after which we would burst violently). I am somewhat medium-term (2-3 year) bullish on the concept but believe the case for single digits is more likely than the case for $1000. Single digits is probably unlikely in the short-term, but IMO $150 is also very unlikely.

Proudhon has been a perma-bear but became bullish @ $50 because he clearly internalized something that changed his mind. It doesn't matter if he's right, at least he's thinking rationally. It makes no sense to be firmly in either camp unless one is a fully indoctrinated long-term holder who doesn't pay attention to the day-to-day minutae (and probably would not even be on this thread). The religious fervor and polarity on this site are interesting. I can't tell if it's religion or just the run-of-the-mill hyper-speculation that one finds on penny stock forums.

The bulls here seem to all be perma-bulls. Permabulls & permabears will always be right at some point. I'm more interested in reality based assumptions and predictions.

What's even more amazing is the notion that Zimbabweans all have computers.

To go from 'single digits' to calling for an approach to the recent highs in coming months.

Really??

Even with new exchanges, infrastructure, Argentina, etc, etc, I still don't see an approach to recent highs.

He's making bold predictions that are a complete 180 degree turn.

Exciting to watch, of course. Hey, he's right thus far.

I haven't been around long enough to see this.....so to me, it's kind of amazing.