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I know many people will disagree with this, I wish Bitcoin could rule the world as well, but it will not happen. I think it’s a great thing BUT:
I agree with Bitcoin crashing. It’s actually easy to understand why? The higher the price goes up the more money it takes to buy 1 Bitcoin. So “artificially” the demand for the AMOUNT of Bitcoins is going down even when, the same “amount of money” is the demand. This effect gets more and more strained until it is impossible to sustain, because there is only so much money on earth. So it crashes, massively.
Real world example: (take my maths and figures as rough guides not facts)
Let’s say demand for bitcoin is just 2 people want to buy bitcoins, each day. (Just 2 to make the math easy)
Money in the market: They have $10 each. (Calculated as the average person’s disposable income, betting on just something for fun)
The math bit:
With the Price at $1: If the price of Bitcoin is $1 each, they will buy 10 coins each. So if there is 20 for sale, they can easily buy 20 of the exchanges. The price will stay the same as supply and demand matches. If there is just 19 available, the price will adjust and go up. Let’s say there is just 8 available, so the price jumps to $10 the next day.
Price at $10: Even though the price is up 1000% (from $1), at $10 each, they can only afford 1 coin each. SO, the demand for actual amount of coins decreased 90% (demand down 90%) simply because the price forced it. The actual amount of people or money did NOT. Next day…
Price at $100: Even though the price has surged another 900%. (From $10). They can only afford a fraction each and the demand for actual coins have gone down 1000%. Next day …
Price at $1000: Not going to bother with the math, but demand has dropped by over 100 000%
With Price at $10 000 000: Every person on earth will need to sell every real asset they have (EVERYTHING) and put it all into bitcoin. That’s every unit of money in every currency on earth, has to dedicate to just one asset, just to keep the price stable. If the difference between buyers and sellers (over every exchange on earth) is just 100 coins too much, the market will have to adjust the price for a $1billion shortfall.
Obviously it cannot get to $10million, as every person on earth is not going to sell their house, car, cat, shares, pensions, etc. for a Bitcoin.
So the question is:
At what point do people stop to sell real life assets to put into Bitcoin? THAT is the start of the crash. As the price rises the amount of money that has to inflow has to exponentially increase to keep the prices stable and going up, until the inflow is not enough. BOOM!!!
Top theoretical price valuation model for 1 Bitcoin before a crash: (making some assumptions and guessing the rest)
So China is 90% of Bitcoin trading.
In theory every Chinese person 1.2 billion buys $1000 of Bitcoins.
Taking $1000 as hey average disposable income, per capita.
We assume that once every Chinese person has spent their $1000 no more will buy.
That’s 1.2 billion times $1000 = $1.2 trillion is the 90% maximum value of Bitcoin before it runs out of steam.
SO let’s say $1.5 trillion total.
Current total value is around $110 billion at $7000, the top possible price to lay somewhere around $ 95454.54 (assuming 15714285.71 Bitcoins in circulation)
Top price before crash:
My guesstimate is a crash from between $9600 (says the maths) and $12000 (adding some cool factor/hype into price) as the top price paid on any exchange.
How long before a crash:
We are at $7000 and the price can go up by $1000 in a day so anywhere from 10 days to 6 months. My crappy math says within 30 days, but I’ll say 6 months because the math can be off by months and thousands.
Logically summing up:
An underlying asset needs to have more than “cool factor”. My house I live in, my car I drive, gold I can make things with, websites I can sell things and make money with. Bitcoin is what, besides cool and new, like currency does not exist. There are over 100 currencies, the difference is a central bank to make sure everything stays balanced. The reality is that governments and bank will bring out their own versions, government licenced and enforced, just like the currencies we have now. This will render Bitcoin obsolete and worthless, except for cool factor, which I put at $50 each TOPS (just guessing). They have to bring out their own, so they can control and manage the amount is circulation and to know who’s paying who. Bitcoin cannot become a true alternative currency (an asset maybe but not a true currency) that all governments and banks will accept. More important you can’t tax it and you have no idea who paid who and for what. Governments’ needs taxes or they will go bust. So either Bitcoin goes to a reasonable price below $1000 (I say $50ish) - or - every government on earth goes bust, while every person on earth ONLY owns Bitcoins, nothing else.
Can the government/banks crash Bitcoin?
With what they have right now, obviously NO!They must have tried several times. So they have to create another way to wipe it out … how .. hang on! Let allow derivatives to be traded in the USA. Then they can take out a massive naked short position (or print money to afford it) and crash the price of the derivative, Bitcoin prices will respond and crash. Is that even possible has this been done before? Now how much did Goldman, JP Morgan, HSBC, Barclays pay in fines for manipulating prices using derivatives … IF I remember right, over $20 Billion. Thats just the fines, for manipulating trillion dollar a day markets, when Bitcoin is something like $100 billion in total. So they can do it (soon), they have now created the opportunity to do it, they will DO IT = VERY SOON.
Markers to watch out for:
Bankers making statements in the press about bitcoin being a bubble. Why do they bother? Are they putting their reputations on the line? Hell no! They are "scaring demand" off, so that the short possition will not get challenged once they start dropping the price. So far, I count 2 CEO's that have called it a bubble, there will be more but not before their posittions are in place. ie: They need the derivatives to start trading on the US main exchanges, so that they can build up big enough posittions to make it sure thing and to make it worth it.
I agree with Bitcoin crashing. It’s actually easy to understand why? The higher the price goes up the more money it takes to buy 1 Bitcoin. So “artificially” the demand for the AMOUNT of Bitcoins is going down even when, the same “amount of money” is the demand. This effect gets more and more strained until it is impossible to sustain, because there is only so much money on earth. So it crashes, massively.
Real world example: (take my maths and figures as rough guides not facts)
Let’s say demand for bitcoin is just 2 people want to buy bitcoins, each day. (Just 2 to make the math easy)
Money in the market: They have $10 each. (Calculated as the average person’s disposable income, betting on just something for fun)
The math bit:
With the Price at $1: If the price of Bitcoin is $1 each, they will buy 10 coins each. So if there is 20 for sale, they can easily buy 20 of the exchanges. The price will stay the same as supply and demand matches. If there is just 19 available, the price will adjust and go up. Let’s say there is just 8 available, so the price jumps to $10 the next day.
Price at $10: Even though the price is up 1000% (from $1), at $10 each, they can only afford 1 coin each. SO, the demand for actual amount of coins decreased 90% (demand down 90%) simply because the price forced it. The actual amount of people or money did NOT. Next day…
Price at $100: Even though the price has surged another 900%. (From $10). They can only afford a fraction each and the demand for actual coins have gone down 1000%. Next day …
Price at $1000: Not going to bother with the math, but demand has dropped by over 100 000%
With Price at $10 000 000: Every person on earth will need to sell every real asset they have (EVERYTHING) and put it all into bitcoin. That’s every unit of money in every currency on earth, has to dedicate to just one asset, just to keep the price stable. If the difference between buyers and sellers (over every exchange on earth) is just 100 coins too much, the market will have to adjust the price for a $1billion shortfall.
Obviously it cannot get to $10million, as every person on earth is not going to sell their house, car, cat, shares, pensions, etc. for a Bitcoin.
So the question is:
At what point do people stop to sell real life assets to put into Bitcoin? THAT is the start of the crash. As the price rises the amount of money that has to inflow has to exponentially increase to keep the prices stable and going up, until the inflow is not enough. BOOM!!!
Top theoretical price valuation model for 1 Bitcoin before a crash: (making some assumptions and guessing the rest)
So China is 90% of Bitcoin trading.
In theory every Chinese person 1.2 billion buys $1000 of Bitcoins.
Taking $1000 as hey average disposable income, per capita.
We assume that once every Chinese person has spent their $1000 no more will buy.
That’s 1.2 billion times $1000 = $1.2 trillion is the 90% maximum value of Bitcoin before it runs out of steam.
SO let’s say $1.5 trillion total.
Current total value is around $110 billion at $7000, the top possible price to lay somewhere around $ 95454.54 (assuming 15714285.71 Bitcoins in circulation)
Top price before crash:
My guesstimate is a crash from between $9600 (says the maths) and $12000 (adding some cool factor/hype into price) as the top price paid on any exchange.
How long before a crash:
We are at $7000 and the price can go up by $1000 in a day so anywhere from 10 days to 6 months. My crappy math says within 30 days, but I’ll say 6 months because the math can be off by months and thousands.
Logically summing up:
An underlying asset needs to have more than “cool factor”. My house I live in, my car I drive, gold I can make things with, websites I can sell things and make money with. Bitcoin is what, besides cool and new, like currency does not exist. There are over 100 currencies, the difference is a central bank to make sure everything stays balanced. The reality is that governments and bank will bring out their own versions, government licenced and enforced, just like the currencies we have now. This will render Bitcoin obsolete and worthless, except for cool factor, which I put at $50 each TOPS (just guessing). They have to bring out their own, so they can control and manage the amount is circulation and to know who’s paying who. Bitcoin cannot become a true alternative currency (an asset maybe but not a true currency) that all governments and banks will accept. More important you can’t tax it and you have no idea who paid who and for what. Governments’ needs taxes or they will go bust. So either Bitcoin goes to a reasonable price below $1000 (I say $50ish) - or - every government on earth goes bust, while every person on earth ONLY owns Bitcoins, nothing else.
Can the government/banks crash Bitcoin?
With what they have right now, obviously NO!They must have tried several times. So they have to create another way to wipe it out … how .. hang on! Let allow derivatives to be traded in the USA. Then they can take out a massive naked short position (or print money to afford it) and crash the price of the derivative, Bitcoin prices will respond and crash. Is that even possible has this been done before? Now how much did Goldman, JP Morgan, HSBC, Barclays pay in fines for manipulating prices using derivatives … IF I remember right, over $20 Billion. Thats just the fines, for manipulating trillion dollar a day markets, when Bitcoin is something like $100 billion in total. So they can do it (soon), they have now created the opportunity to do it, they will DO IT = VERY SOON.
Markers to watch out for:
Bankers making statements in the press about bitcoin being a bubble. Why do they bother? Are they putting their reputations on the line? Hell no! They are "scaring demand" off, so that the short possition will not get challenged once they start dropping the price. So far, I count 2 CEO's that have called it a bubble, there will be more but not before their posittions are in place. ie: They need the derivatives to start trading on the US main exchanges, so that they can build up big enough posittions to make it sure thing and to make it worth it.
You do realize you can buy a fraction of a bitcoin right? You don't have to invest your life savings in order to get involved....
