A lot has changed. Bitcoin is known by a massively larger number of people than it was before the bubble. It's still fairly small but it has gotten way bigger. For the price this means that there is in general much more demand than there was before, even though the bubble from the hype was massive.
No, it does not mean that. At the peak of the hype (at $32) we had 60,000 users at mtgox. Do you think we've gone to 120k? 240k? A million users? Ten million users? A hundred million? A billion? I simply don't see the demand you speak of. The only demand I see is the demand for exchanging bitcoins for dollars. The $32 price marked peak interest, confirmed by google trends. But a lot of small investors know about it at least and even some big players, which does make it very unlikely for the price to go very low (by very low I mean where it was in the beginning of this year when Bitcoin was still mostly unknown). What an olympic logic leap. Lots of people know about Amway, but for some reason they're not getting in. Off the top of my head I can name a dozen stocks and commodities currently circling the drain. Guess what, the same investors, big and small alike, are not buying them either. And those issues are being traded on legitimate, accountable, regulated exchanges unlike bitcoin. Bitcoin price absolutely can go lower, and it can even go to effectively zero. There are far more scenarios where that happens instead of the world population suddenly waking up and going "You know, it's about time we made Satoshi and a bunch of other guys who heard about this internet funbucks pyramid a year before we did multi-billionaires." This is assuming that Bitcoin stays legal and the technical fundamentals stay robust. As long as this is true I'm quite sure Bitcoin will succeed at least as a niche currency. Which is fine enough for me.
The technicals remain as un-robust at $5 as they did at $32, $24, $20, $17.5, $15, $14, $13, $11, $9 and $6. We'll talk legality and possible regulation after French courts decide whether bitcoin is currency or not. As far as being niche -- well, I hope you're into items on pirate WoW servers, wire fraud, illegal drugs and child porn. When those are the 'niche' use cases for bitcoin your $ exchange rate is not going to pay for a very impressive hash rate. |
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Exactly. Bitcoin value is determined 100% by speculative sentiment. Bitcoin does not generate any revenue directly, it's impossible to project an ROI or P/E since there ARE no earnings.
To be precise there are probably some earnings by the Silk Road folks - but I guess this is not significant in any way. I suspect those are a complete wash. The dealers sell their received bitcoins as soon as they get them, and customers just buy at the market price. End income to bitcoin community: nil. |
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Well, for the last 4 months or so it's been a win to bet against bitcoin. I think it'll take some massive momentum to get things swinging the other way.
Or capitulation. I don't think it'll be long now. Continued slow pain until thanksgiving, then some brutality over the long weekend. More shock and awe continued over xmas and newyears. After people are done running around on fire and screaming we can base and start the uptrend. That, or stick a fork in it. |
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My mining or not mining has really nothing to do with the prospects of Bitcoin, at least not right now. Mining is still profitable for me with the current price. When it is break even, then prospects come into the picture. Prospects have more to do with what BTC I sell or don't sell, be it mined coins or bought coins.
Do you sell your coins as soon as you mine them? I think I know the answer to that one. Like most miners you are bullish on the future prospects, being profitable (on paper) assumes price does not decline. That's a bullish sentiment. If difficulty hits 500k it's because the price has dropped significantly, not the other way around. Again the price doesn't increase or decrease specifically because of what miners do, miners mine the same amount of coins regardless and some sell, some don't. Price doesn't matter much regarding what they do. The price moves because the demand drops, investors and traders sell etc. Difficulty follows price and price is affected by difficulty. I've gone over this a million times. When the cost to produce bitcions is 1/10th the cost of direct buying people have opted to invest in mining gear instead of buying, driving up difficulty and driving down the price. I have to make one important correction though, that might not be clear from previous posts. Many people are miners and investors at the same time. Or miners and traders. Every time a miner saves a coin for at least mid-term and doesn't sell, that coin is not regarded as a miner effect anymore in my book, that coin has been invested. Thus miners do have a significant effect in total but not nearly all of it as miners, could be as investors or traders as well. NOW you get it! Miners who don't sell immediately are speculators. That's why I try to understand the miner community mindset, it's a good proxy for the entire bitcoin mental state which is far harder to measure objectively. Anyway, I think the much more relevant point to why this is happening is insufficient demand, not the fairly stable supply which has always been stable. Demand is the one factor that changes the most and has caused all the ups and downs in Bitcoin's price so far.
Exactly. Bitcoin value is determined 100% by speculative sentiment. Bitcoin does not generate any revenue directly, it's impossible to project an ROI or P/E since there ARE no earnings. Nothing has changed since the $32 speculative bubble high, but the network does have a cost of $24,000 a day to run. Some portion of that money does come from $ already invested and the rest comes from people "breaking even" on paper. We are literally one 'early adopter' (read: someone who heard of bitcoins six months before I did) deciding they want a nice car or house away from shaving 50% off of bitcoin. Going back to $10 (never mind $30) will take a lot more than that. |
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I don't use charts period. I'm of the technical analysis charts are BS school of thought. Those things are great for looking at history, but apparently suck for any predictions, since every time the price changes unpredictably, everyone just moves their projection lines, and in that case you may as well assume that it will just keep changing unpredictably.
Charts are great for helping determine whether a trend is still in progress. That's their main use. They are lagging indicators, but if used properly can be great ones for fine tuning your trades assuming a higher likelyhood of continued trading range, bull or bear trends. So far charting has been 100% correct in confirming continuation of bitcoin trends (both bull and currently bear). There are a few predictive indicators, but they don't go predictably enough to trade from all the time. |
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Well, for one I disagree that it has any relevance whatsoever how many miners are still mining, as far as the price is concerned.
That's your stance. You wouldn't be mining if you expected bitcoin prices to tank, which means since you ARE mining you're bullish on bitcoins prospects. Ditto 90% of the bitcoin community. Also, the number of people mining DOES have an effect on the price. Do you for a minute think $5 would be a "bottom" if difficulty hit 500k? I know I'd be willing to sell coins for $1.50 at that point. As soon as BTC get cheap enough that it's not profitable to mine at 1.7 million difficulty at even at 4.6c/kwhr (my rate) you won't see a 5% drop, you will see massive swings in difficulty every 2016 blocks. 500k for 3 days, 2 million for two months. Repeat. $6 is the new $9. Which was the new $11.50. Which was the new $13. Which was the new... Well, you get the picture. |
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Sentiment shmentiment. There's no fresh meat dumping massive amounts of cash in, and we keep draining what the last batch has provided. I've personally sucked a few hundred dollars out of the system, and if even a tiny percentage of people pay for the power they use to generate bitcoin by selling then we've extracted quite a bit of value. MtGox and tradehill &c all have to pay their bills, so they're also running on that influx of cash.
We need new suckers, and we need them NOW.
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For future reference, of course, when all would-be muggers are familiar will all smartphone navigation screens, as well as having their own bitcoin account into which he would send the ill-gained bitcoins he mugged.
Good point. It'd be far easier to just kidnap MagicTux and beat him till he gives you admin access to mtgox. After having shorted a few million worth of bitcoins. Which (luckily for us and him) remains an impossibility. |
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Are you assuming that all miners sell what they mine? I don't understand why a decrease in difficulty / decrease in cost to produce would necessarily equate to a decrease in USD/BTC.
Because when BTC cost $.75 to produce and $32 to buy there was no discussion of whether mining or buying was the right way to go. Massive hashing power was being added as quickly as hardware came in stock. While there may not be a direct correlation between price and difficulty as a result of "buy and hold" strategy which worked well during an uptrend there is most definitely an influence of one on the other. |
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Now, from a long term perspective, it's a good time to buy. It's not guaranteed Bitcoin will succeed so it's a gamble, but it's a smart gamble taking into account everything Bitcoin has potential to do.
No, it's not a smart gamble. The far smarter gamble is to go along with the trend. Deposit money you'd use to buy bitcoins and wait until capitulation. We're still in denial phase of post-bubble psych, when the fear kicks in it'll be time to start looking harder at buying. When the last bitcoin bulls start throwing in towels is when you buy with half your funds. Sell half into the post-apocalyptic dead cat bounce, buy again a bit later and THEN hold and accumulate if there's an uptrend. We're still at near the peaks of hashing power on deepbit. That means most of the community is still bullish, even if some are mining at a loss vs buying. There is little to no bear sentiment as prices decline, let alone fear. That's exactly what you see immediately before a penny stock post-bubble panic. "I'm in it for the long term no matter what" bagholders are few and far between when you look at successful investors and traders. Bottom fishing is an artform, and isn't as simple as catching every knife that drops. |
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Dammit are we just going to stay here at $4.8-4.9 forever?
I see that someone just put up a massive 7k ask wall that is probably fake.
If you're lucky. Otherwise we'll have a repeat of we had last month. Stagnates for a month, then drops another 20-30%. Not sure it'll happen until Thanksgiving though, longs were only brutally punished over long weekends in the past. Remember, we mine 210,000 (or ONE MILLION DOLLARS /evil) worth of coins every month, even at $5. Whether or not they are sold people feel that much richer on paper, and the market cap grows. Unless bulls step up and start coughing up a LOT of fresh new money each month we're all just trading for an ever shrinking amount of dollars per coin. |
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Yeah, everyone's bullish. Hash rate starting to climb on deepbit. But price isn't really going where I'd like to sell at.
Permabulls need to stop talking up the price and start depositing more money. A lot more. And they need to do it before thanksgiving/xmas holidays hit and we get "the usual" just like we do every long weekend.
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$1k for a 1.8 ghash board, anyone? As a rule of thumb, figure a profitable retail price on electronics as 4x the parts cost. 2x in real volume, like a cell phone. What's your time worth? And yet, you can buy a 1 chip board for around $410, a two chip board for $610. Retail. Assuming digikey is a viable retail operation you can guess volume production costs using wholesale pricing could make the final product viable at retail cost of the parts. I won't deny this is not reality today. Reality today is 180 mhash for $610. Possibilities are there for much, much more however. Within a time frame much smaller than "bitcoin at $100." |
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If it was miners, the price would be.. zero.
Just wait. In all seriousness, most of the mining power joined in June and July. Like me these aren't early adopters. Our vested interest is not in making Satoshi a multi-billionare ASAP, it's making $ now. While previously a small % of mined coins made it to the market (the first bitcoin hack only saw 500k coins in mtgox's trading account, with about 6M mined) I'm betting 75% of the mining power would like to pay off their rigs and power bills before speculating. That's why we went from selling ~10% of the mined coins to around 30% in the space of weeks. Last time mtgox feared being hacked they moved 700k coins around. One way or another 200k coins made their way to mtgox over that time. Yes, speculators are the ones with fiat currency, and they by definition determine how many dollars each bitcoin is worth. But increasing the supply via selling a larger portion the "new" miners are definitely a factor. |
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Finally fall already! It's been stagnating for two days so it's going to do it. But it takes forever!
Not likely. Two opportunities for weekly highs are sunday evening US time and tues/wed morning. IMO we'll see $5 again before we see below $4. You're gonna have to hang out till Thursday. This has nothing to do with Dwolla and banks. I'm not even sure ANY new money is being deposited any more. |
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I won't be left to the side. I'll build a long position through mining -- we're all in this for the long term, remember? I don't HAVE to direct buy in higher, I don't have a short position to cover.
But yeah, we're seriously overdue for a bull trap. I've now mined 2 more coins since having completely liquidated and would love to sell them higher than 4.50, same as all the other 12 terahash worth of mine-and-holders. We got plenty of raging bulls (who seem to be out of money though), we're through the rough friday/saturday time of week.
My selling opportunity is coming up, I just know it.
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Multiply coins times current dollars to estimate the exchanges cut fiat currency. Paying for power, servers and bandwidth (not to mention salaries) in bitcoins is a difficult proposition at the moment so their lifeblood is real currencies.
For example, for 30k coins at .6% commission:
$30 = $2700 a day
$10 = $1800 a day
$5 = $900 a day.
$1 = $180 a day.
10c = $18 a day
1c = $1.8 a day
Volume hasn't really changed much as prices dropped. So at some point if the prices stagnate long enough it may become uneconomical to run an exchange. And at that point selling accumulated coins won't help much either.
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One other thing to put into your calculations.
The current board seats two FPGAs which cost $158 retail from Digikey. The power circuitry, and, really, the rest of the board should be manly enough to seat six or eight of those. Basically we're a small rework away from a $1400 board that could churn out as much as 1.8 gigahash (but today would yield around 1.4).
That's down there with 3x5830 rigs on a price/mhash, but would use 1/10th the power. Also, with 6 chips per board it'll be easier to hit quantity discounts (lop another 200 off). $1k for a 1.8 ghash board, anyone?
This could be done TODAY, with TODAY's pricing.
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I guess we have our answer as to 'what happens to bitcoin breaking $8'. It's pretty much nothing. The miners are still there and the hashing rate has surprisingly hardly decreased. Maybe they're holding on again until they can sell closer to $10, but that creates a huge overhang of bitcoins to sell into a struggling market. For the foreseeable future it appears that anything $10+ is long gone.
Bitcoins have now twice slumped below $5 and only trading activity due to hacked accounts lifted that briefly.
More continued slow pain for the longs, yup. Neither $8 nor $6.58 were special at all. Looking like $5 is no big deal either. I project deepbit being only 10% off all time highs to 90% of the community being short term bullish. That... may not end so well for most once we get through the denial post-bubble phase and into the panic phase. |
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Why sell low?
Because we'll be able to buy more, lower. Yeah, waiting for the spike has hosed me the last 2 weeks, but hey. That just means I'm one of the "holding for the long term" crowd now desperately hoping to dump into the first rally to come along. Got my sells staggered all the way up to 9. Come on bulls, get a second mortgage or something! |
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