I predict an early morning push to 8.50-8.75$ after a further decline in US markets.  Volume may decrease as a lot of the HFT bots will need to be retooled and diminished in trading frequency to keep fee cuts down.

I did via non-technical analysis https://bitcointalk.org/index.php?topic=34978.0

And we're back up to nearly 8 again

Here's more of my non-technical analysis: plateau at 4-5$ USD by the middle to end of next week.

I discussed it yesterday, see here: https://bitcointalk.org/index.php?topic=34978.0

edit: nevermind, I mistakenly thought you were disagreeing.

The thing that could easily work if bitcoin were to fail as a currency is a currency which is backed by something -- computational value.

It's not very hard to securely run a virtual machine that could offer clock cycles from your CPU or GPU to some enterprise that needs them.  These clock cycles could be measured as VM process walltime and then be used to issue currency similar to bitcoin based on this.  Initially the currency should be extremely cheap from whoever is issuing it, spurring people to buy some of it.  The currency is then exchanged with users based on the wall-time of programs running on the VM on their computer.  The VMs will basically be like shells to the outsider who can run whatever they need too, eg parallel data processing.  The end user should be able to place restrictions on the shell (e.g. HTTP port access, mail server access) to prevent illegal activities such as spam.  In time the supply will be restricted and the people who want more of this currency to run more simulations will have to buy it back from the people they'd issued it to.

If we could figure out a way to string these nodes together for parallel jobs easily, this application could overtake super computers in terms of cost of utilization...

In fact, we could keep bitcoin going if we used it like this.  But anyway.

Bitcoin I think is set to head down to $4-5 each, I give a detailed explanation here: https://bitcointalk.org/index.php?topic=34978.0
Basically the era of 100% ROI is over for BTC

The Bitcoin Crash
Timothy B. Lee
http://blogs.forbes.com/timothylee/2011/08/07/the-bitcoin-crash/

Further carnage.

Yes, but how many of them are sustainable?  It's only a matter of time before someone realizes they are being short changed.  It's a zero-sum game.

Electricity price is dictated by the price of gas and coal and a few other materials and the amount of demand.  No one is going to give it away for free or even next to free.  The one thing economics and thermodynamics have in common is the law of conservation.  Even in places where it is about 1/3 of the cost of that in the US it is certainly still not free, and if suddenly everyone went there and started bitcoin mining the price would go up anyway because the demand for electricity would go up.  Start up costs are also higher in these countries because they are not the leading importers or fancy electronic goods and therefore must pay more to have them shipped to them, and also have to deal with high taxes of importation many times.

No, that will never happen.  What will happen is that electric companies and people who provide power will begin to become much more aware that people are using their power to mine bitcoins and will put a stop to people mining for free, because what it amounts to is theft.  With bitcoin, we've basically made a way to produce money from electricity.  Once this is more widely known it will be clamped down upon hard, much like marijuana grow-ops that do so are (which operate on the same principle aside from the sale of an inflated black market product).

Bitcoin will currently continue to lower in value as long as the following is satisfied:
- Miners can sell the BTC they make for more than they can easily invest it for (>5% annual, maybe >2.5% in the current economic atmosphere)
- The global economy is a downfall and people are looking to liquidate assets while they are still worth something.
- The BTC surplus as a result of high speed mining and immediate resale of mined BTC continues, that is, there is a low demand for BTC while the number of sellers remains high.

Eventually a point must be reached at which the miners are no longer willing to sell any BTC and an equilibrium must be established.  Where is this?

Average price of power in the US: 0.1109$ / KWh (2.66$ USD/day)
Typical hash rate/KWh: 1,750 MH/s (AMD 58xx/69xx cards), or 0.84 BTC/day
Average amount of time to mine 1BTC at this hash rate: 1.19 days
Total cost/BTC: 3.16$ USD

Let's looks at the current price of BTC, 7.5$ USD or so.  This represents an insane 99% profit after addressing for power.  Of course, hardware must be factored in here too, and it is assumed that at the end of the year most miners will have spent more on hardware than on power.  How much more?  A rig that can mine 1750 MH/s probably costs in the vicinity of 1000-1300$ USD.  The value of the hardware probably declines by about 30% each year.

Looking at each miner per year, let's say the rig costs 1200$ USD and by the end of the year just 840$ USD from devaluation.  The bitcoin miner must make 360$ to recoup this loss.  This makes our math easy, because it's clear than that he or she must make at the very least about 1.00$ per day.  We also know that we owe 2.66$/day of electricity, or about 971$ per year.  We mine 6.30$ USD a day (0.84 BTC), so our ROI (return on investment) is still 72% percent.  This is an enormous and unsustainable value.

Altogether, the cost of mining with this 1,750MH/s rig is 1330.90$ USD per year.

We need to make all this back plus at least 5% for ourselves.  That's about 1400$ that we'd need to make that year, to make this worthwhile.  That would mean we'd have to be mining 3.84$ USD of BTC a day, or that the value of BTC would have to be 4.57$ USD.

What matters is not the amount of BTC being mined each day or the difficulty or whatever.  What matters is the USD equivalents of whatever is being mined per day.  If the USD equivalent is less than the end of the year hardware costs and power costs plus a small 5% or so share, no one will mine, period, and the price must rise.  If the USD equivalent is more than the end of the year hardware costs and power costs plus a small 5% or so share, everyone will mine and the price must fall.

The current price seems to be unsustainable, as there is no reason to invest anywhere else if BTC mining returns such insane amounts.  For people investing in mining rigs there is another loss fear in case the market collapses and you lose the amount you spent on electricity and the devaluation of your hardware, but there is no way that price is an additional 65%.  There are no 70% junk bonds; at best it represents an additional maximum of 5%.

ASIC mining/other highly targeted hardware may not change this much because the resale value of something that can only mine BTC will be worth dickall in the event of the BTC market collapsing and must be purchased cautiously at the present time.

I'm waiting for the hash rate ship to sink

Oh noooo you guys oh nooooo

The US just got downgraded and bitcoin is being devaluated as much the as US stock indices, deal with it

Every 2016 blocks I think, which at the current rate would be about 17 days from the last difficulty change

The daily return of BTC for all miners based on the numbers of TH/s just fell from 7500 to 5875...  if at every difficulty increase we see a similar drop out of miners eventually the number of people inject BTC into the market for USD/etc. will decrease and the price would have to increase.  This is, of course, classical deflationary economics; the only thing that needs to stay the same is demand.  As long as people are using it for things or there are price fluctuations, that's no problem at all.

The price of BTC is whatever people are willing to pay for it.. and as the applications of BTC are increasing rather than decreasing and number of coins mined daily are also decreasing, it's likely that it will remain here and high priced.

The markets do as the markets please.  When people stop wanting bitcoin, bitcoin won't be worth anything.

Until then...

No reason to deal with Canadian banks.

Deposit say 100BTC to Cavirtex or Britcoin.  Convert half of it to the local currency at whatever the going rate is.
Say Mtgox drops in price but Cavirtex remains the same.  Buy BTC at Mtgox, send it to Cavirtex, convert to CAD.  Eventually, the market at Cavirtex is likely to go down too.  When this happens, rebuy the bitcoins at this lower price, then send them back to Mtgox.
The same thing but backwards works fine if Mtgox raises in price but Cavirtex is still lower.  Doing this you could (at least formerly) make 6-10% in a day or so, albeit on small amount.  But that much in a couple of weeks means doubling your money.

Obviously it's slow to wait for the six confirmations, which is why you have the 50BTC/50BTC-CAD equivalents buffer.  The buffer is spent instantaneously while you wait for the confirmations for the amount you just used to be sent from your Mtgox account.

And now this'll probably be less profitable since I'd mentioned it, but oh well.  I'd settle for better trade volume on foreign exchanges; if bitcoin becomes a tiny-fee Forex market it has the potential to replace the other Forex markets which is best for everyone involved in bitcoin.

We have the foreign (though not as large markets) available to help stabilize the price through foreign trading.  As soon at the Mtgox price goes down it can be bought and resold for small gains in the foreign markets as people seem to have figured out yesterday.  You don't really even need to handle foreign currency to benefit from the forex trade, just open an account at one of the other international trading places and push it back and forth between markets with BTC as the common ground.

Volumes are healthy, not only in US markets but also in Canada and Britain.  It is the first time for the latter two to stabilize in terms of buyer/seller volume, normally seller volume for CAD/pound highly outstrips buyer volume.  It appears that US buyers may now be operating in these markets to make cash through forex when the price of BTC fluctuates as the overall trade volumes for these foreign markets has exploded over the past 24 hours.  This should bolster investment in the US market as well and enhance stability as BTC becomes further an international monetary instrument like gold.

Overall network hash rates have fallen sharply so the incoming supply of bitcoin through this medium is low.  Forecast: Final Mtgox close will be 10.75-11.5 by the end of the day.

Which is good, we had to see a power expense to profit level evening out eventually and I think very quickly we will.  As soon as the number of TH/s fall the supply will deflate and we'll see less BTC going into the market, which should inflate price.

Yup, the volumes are great news, people are in on bitcoin whether we like it or not and it's not just stagnant bot trading