If you're correct, then the OP's $1300 "advice" is sound, no? We invest in other, more profitable ventures "until" BTC/USD reaches $1300, right? Or are you saying that (a) price will never reach $1300 but (b) keep our money invested in BTC regardless, just for old times' sake?

Edit: (from the OP): "If the price doesn't reach $1300, then bitcoin failed or something seriously went wrong. You will save yourself a lot of time and money."

It has time along one axis ("Year"), and inflation along the other ("Inflation rate (annualized)"). You can use the chart to find out what the inflation rate will be at the end of 2016, but you won't be able to use it to predict the price. For that you'd need a crystal ball.

They can influence other traders, for a limited time. They can't create demand (or supply) out of nothing. A large trader, wanting to buy cheap BTC, could sell a fairly large amount of BTC, wait for naive traders to panic, and then attempt to buy BTC at a cheaper price. But this isn't a one-way operation - it relies on two parties, the "whale" and naive traders. The same applies if the "whale" creates an ask wall (or bid) wall - if it works, it works because some traders have been influenced, for a limited time (as long as the large trader can keep the wall intact, if that).

The market regulates itself - it finds an equilibrium through trade. If a big trader successfully pushes the price down, the price either rises again - or the lower price is the correct price. The panic from a sudden dump only lasts so long: sooner or later an increasing number of panic-struck traders realise that, apart from that one dump, nothing much has changed, and they switch from bearish to bullish, or at least neutral.

Incidentally, all traders have influence on other traders - every time we complete a trade it feeds into the overall feeling of the market. It's simply that larger traders tend to have a larger influence. But that's all they have - they can't force people to sell them cheap coins.

Supply and demand are the only things that make BTC (and other currencies, commodities and stocks) change in price. There are numerous factors that can influence traders, increasing demand or increasing supply, but neither "whales" nor miners are particularly special when it comes to trading BTC (or any thing else, for that matter) - they don't get a free pass on supply and demand, they're subject to the same restrictions as any other trader.

"Whales" are market participants, same as any one else buying or selling BTC. They simply have more resources than the smaller traders who refer to them as "whales".

Miners are market participants, same as any one else selling BTC. They can choose to sell - or not sell - their BTC, same as any one else.

No. BTC and (most) other currencies are no different in terms of price discovery - they float against other currencies. BTC/USD varies with every trade, just as USD/EUR does, just as CHF/JPY does.

The price of BTC varies for the same reason the price of any currency varies - because demand is not equal to supply. Right now GBP is varying against USD (GBP/USD) - some people want to buy British Pounds with their US Dollars, some people want to buy Dollars with their Pounds. If there are more people wanting to sell more Pounds for Dollars than people wanting to sell Dollars for Pounds - then the (Dollar) price of Pounds goes down (supply of Pounds is greater than demand), and the (Pound) price of Dollars goes up.

There are very few fixed price currencies, the Hong Kong Dollar is a current example, and the Chinese Yuan was too until 2005 (and is still "managed" or "pegged", rather than being allowed to float freely like USD, EUR, and BTC.

Well, I guess. But they're pretty representative, surely? Bitfinex, Bitstamp and Coinbase account for ~3/4s of BTC/USD trades.

Uh, that's not correct. Leaving aside whether "market cap" is the correct term (it's "borrowed" from equities, so strictly speaking isn't correct in an FX world, but we've adopted it for cryptos regardless) it's calculated by multiplying stock price by quantity of stock - or BTC price by available BTC. That's why Bitcoinwatch, for example, state "market cap based on latest prices".

No problem! I believe OKCoin and possibly a few other "regular" exchanges do futures, if that's of interest? Vanilla options just seems limited to Coinut for now, unless Quedex has finally moved off testnet. At least one poster here has offered OTC options trades in the past, as well.

Good luck with that short!

A couple of weeks back you were wanting advice on safely storing a large amount of BTC. I take it you have >= £15k in BTC, and you're worried about the GBP/USD rate falling over the past few days? This is pretty standard when you hold any currency other than your usual one - people earning in USD and spending in GBP (e.g. working in New York, paying mortgage on house in England) face this every time the exchange rate changes. Pairs of currencies (like USD and GBP, or GBP and BTC) experience price moves all the time, and the volatility of BTC against USD isn't that far away from the volatility of the Euro against USD (~2% and ~1%, respectively).

I can't help with your current situation, beyond saying it's an expensive lesson in carrying out adequate due diligence before making an investment! However, if you're ever in this situation again, with any currency, there are ways to "hedge" to protect yourself against exchange rate fluctuations. If you're a hands-on type investor, check out "options" (in the Bitcoin world there's Coinut and Quedex); if not your bank or IFA should be able to help (it'll be more expensive, obviously, because they'll take a commission).

OK, I can possibly help with your current situation. Ride it out! It's highly unlikely that a few days' down means "never go up again" - yes, it will stop dropping. Alternatively, if you really can't sleep at night - sell BTC until you reach the point where you're not worried. And never invest more than you can afford to lose - the loss of sleep isn't worth any possible gain.

It's FUD, but like all good FUD it has some basis in reality:

http://ec.europa.eu/justice/criminal/files/com_2016_50_en.pdf

The tl;dr version is: European exchanges will be subject to AML/KYC, bringing them in line with exchanges in the US.

I guess "Bitcoin exchanges: European-US harmonisation imminent" doesn't have quite the same ring as "EU is about to end bitcoin anonymity". Though it does have the advantage of being factually correct. I live in the EU and this will affect me ... not at all.

For laughs, here's what price has done since this shocking announcement.

If there were more sellers than buyers on Chinese exchanges  we'd expect the BTC/CNY rate to go down, and that it would tend to be slightly lower than BTC/USD (because arbitrage isn't perfect). Right now the BTC/CNY rate is 2875 on Huobi, which bitcoinwisdom converts to $438.80. For comparison, Bitstamp and Bitfinex are $429.92 and $430.51 respectively.

(That "arbitrage isn't perfect" comment - I could sell BTC on a Chinese exchange and - in theory - make money on the deal: convert the CNY to USD, buy more BTC, and repeat. In practice converting CNY to USD is non-trivial, and takes time.)

To be honest, that's kinda my position - I'm wary of the moon-talk, while being quietly bullish for the long-term.

Anyway, thanks for a good discussion - lots for me to think about! (I have zero experience with alts, by the way, and no recent experience with mining - I stopped mining when mining gear changed from "something I could recycle to play games" to "specialised hardware only useful for mining", and a lot has changed since then).

Maybe. I do remember the excitement when we hit $1 and $10, but equally I can remember sitting around $10 for what seemed like an eternity, wondering if we'd ever see $20 again... I think the Golden Age of speculation was the year after the first halving, when we saw two new ATHs. Before that we'd had some initial price discovery (2010-2011) and then a long time sitting around $10 (2011-2012).

I have to admit I'm not sold on the 100 @ $1 vs 0.1 @ $1k argument. Take a hypothetical marginal miner making BTC worth $100 and with current costs of 99%, looking at $1 profit (in BTC), but with an expectation that the price of BTC will change (rise). I think in general there's an expectation that price's rate of change increases, but even without that assumption a miner (in the past and at present) has no certainty over the future. A miner who profited with $1 worth of BTC in March 2011 (when $1 = 1 BTC) and then sold two months later would have done worse than a miner who profited with $1 worth of BTC in December 2013 (when $1000 = 1 BTC) and then sold months later! (Sorry, that's a fairly contrived example, but I'm sure you get the point). Price decreases come in similar sizes to price increases, then and now.

Ah, you're talking about the risk of price falling, I think? I'm not sure I'd see that as a risk so much as business-as-usual. I was thinking more along the lines of the risks hinted at by the OP, of an existential risk to the protocol itself (a risk I personally think is minimal and overstated).

Difficulty was significantly lower than it is now, sure. That doesn't mean mining was more profitable, it means that profitable miners then were more profitable than profitable miners now (for some miners, then and now, mining is not profitable). Mining has always been unprofitable for some miners - that's the engine that drives difficulty changes, and ultimately efficiency.

There were always "too many" miners - that's how difficulty works. This is how difficulty changed over Bitcoin's lifetime. The "drops" are because miners stopped mining (it was taking longer than 10 minutes for each block to be found). The drops in difficulty in mid-2011, that was because miners were stopping mining - because they were finding mining unprofitable. Small miners, still using GPUs, were competing with "farms" of rack-mounted boxes containing multiple GPUs. It was difficult for home miners to survive then. CPU miners had already been through the "there are too many GPU miners" stage; solo miners were starting to realise that pool mining was the future. Miners were starting to talk about FPGAs and ASICs.

@amph, the block reward was higher, but it was also worth considerably less than it is now. Back then $50 was a good price - a 50 BTC block reward was worth £2500 (50 x 50). Now $450 is an OK price, and a 25 BTC block reward is worth $11250. Then and now, there were/are miners operating at the margin, miners who did/will drop out at the next difficulty increase because they were/are barely profitable. Difficulty has always worked to make sure that mining is driven by efficiency - that less efficient miners are less profitable or unprofitable. There's no guarantee of huge profits, except through being more efficient than your competitors.

Are you saying the risk increases (exponentially?) with every block reward reduction? I'm sceptical, to be honest. Post-halving, less efficient miners may stop rising - if that happens difficulty will fall, miners will (re)enter, difficulty will adjust, and the system will settle to a new equilibrium once again. What scenarios would prevent equilibrium?

I'm not sold on the idea that the first halving was no big thing, or that future halvings will be more prominent - but at this point we've only had the one halving, so we honestly don't know. I'd expect the importance of the block reward reduction to decline with each halving (as the proportion of block reward to transaction fees changes), but that presupposes a mature market in transaction fees. Why is it you think halvings will increase in strength?

It's not the first halving - the first was from 50 BTC to 25 BTC, in November 2012.

I don't understand why people stress about it, either.