Actually, those are all price points I sold coins at over the past 2 months.  Last ones were at 10.90, and unfortunately I've received another 2 since then.

I was just putting myself in the shoes of the OTHER counter party to my trades and projecting future ones.  I find that "what would I do in their shoes?" exercise valuable in the past.

We're argued this in a different thread.  Miners absolutely have places to go -- a 5830 can be sold for about $100 today.  Call it $80 for a fast sale.  Anyone buying intelligently will have rented one for $20 over 2-3 months.  Bitcoiners are still a tiny portion of the GPU market, those cards are still viable for gaming today.

Then instead of mining sit on that money until both difficulty and price tank over 2 months, re-enter by buying more efficient 7 series hardware.  First ones out, just like first ones in, will reap the greatest rewards using that strategy.

Sure, there will be some who mine at a loss and make it up in volume.  But that isn't a requirement.

And since it's probably faster to sell hardware than to buy it the down spiral may go just as quickly as the up one, if not more so.  Call it 6 weeks instead of 8 to get back to 400k difficulty.

I saw the first signs of this a month ago when one operation was trying to liquidate about a hundred 5830s + PCIe extenders for $150.  Not sure if they got that kind of prices, but if so it was a genius move.

I wouldn't say sank just yet, we're still valued at over 50 million for the whole enchilada.  That's still a bunch of cash.

However, we've definitely hit an iceberg and are ingurgitating sewater.

As a thought experiment, consider me starting my own bitcoin chain at a difficulty of 2 million.  The supply is considerably lower than current BTC, but what is be the price?

At some point everything effects everything.  I've always argued the *primary* driver of BTC price is demand, not supply.  For the current market the existing 7 million (and increasing) is arguably sufficient supply.   The supply has not varied very much over the past 6 months.   However, what HAS varied tremendously was demand.

Anything could happen.  However, I don't see the motivation for an early adopter BTC panic unless there's reason to believe the pyramid is on fire.  IMO that isn't until difficulty starts dropping.  Difficulty dropping -> less interest in bitcoin -> lower odds of higher future payout -> sell at any price.  So long as difficulty is increasing the odds on a higher long term payout are on ignoring temporary price fluctuations.

These aren't panicky traders, these are engineers.  Temporary price movement while the long term trends stay intact are no big deal.  Changes in fundamentals, well, that is different.

Yes, it is a doomsday scenario.  But you are also unrealistic in that it simply can not happen.  There is a 2 week lag time in the price to difficulty feedback loop, but once started it may work the same way as the positive feedback loop.  People still have the option of selling their mining hardware.

We've seen this with namecoin.  Once the hashing power starts dropping it falls like a rock, and price follows.  Miners and traders alike project weeks to months into the future and price accordingly.

In any event, we're in violent agreement.  If there is no change in current difficulty $6 is also my bottom call.  If we see a negative feedback loop all bets are off re: the bottom.  Just like going long through buying bitcoins everything depends on how much faith the current community has in the long term future of bitcoin.

To start with, I believe your model for BTC price (and difficulty) is uncanny.  The error margin you've achieved boggles my mind.

But my magical ass once again disagrees.  I agree the price/difficulty negative feedback loop, if started, will cause a a more drastic decrease in price.  What I don't believe is it will be triggered as early as next week.  There is about a 2 week lag time in price affecting difficulty according to my butt.  I strongly believe a 1 week timeframe is way too short for a death spiral.  Heck, one week is too short to even DETECT a possible difficulty decrease, never mind project it.

Then again, I only have data points on difficulty increases.  Difficulty decreases, were such a thing to happen, is not something I have enough data on.  You could be right, but once again my butt feels otherwise.

Always good advice, but I believe your premise is wrong.  Bitcoins are valued by the demand side, NOT the supply side.  I can mine my own block chain for pennies, and yet those coins are likely worth even less.

What matters is the current cost to mint one but more importantly the demand for coins.  If someone wants bit coins their *current* choice is to mine or buy.   They can't get into a time machine and mine with a CPU back in 2009.  So, if the market cost is under power cost it definitely makes sense to buy, pegging price to power cost.

What you're talking about is saturating the demand with existing coins.  I admit, that could happen.  But if an early adopter didn't cash out at $10 to buy more hardware to recoup their investment they are probably not going to do so at $3.  In other words, IMO the lower the price goes the lower the odds of those 5+ million hoarded BTC hitting the market.  OTOH, all early adopters are kicking themselves for not having sold yet, so there is definitely a rock solid resistance level at several previous highs.  Including as low as $11.

If you factor in 50% hardware depreciation over 2 months we're there now at $7.70 assuming 14c/kwhr power and $1/gigahash hardware cost.  Those of us mining and building efficiently (read: $.56/gigahash, .6c/kwhr) are still profitable until $5 at 2 mil difficulty. 

Then again, profit is relative.  Is it worth risking hardware failure, extra heat and noise for $10/month per gigahash?  Yes for some, less so for others.

Add to the mix variable difficulty.  If difficulty decreases as Europeans and Hawaiians and others with power costs significantly over 14c/kwhr stop mining then the rest of us may be profitable at yet lower prices per BTC.

While there's been a slowing of difficulty growth over the past 4000 blocks or so I don't see difficulty going negative -- yet.  At $6/BTC that might start.  And a difficulty drop is when I start calling the pyramid on fire and running for the exit.

Looking at number of bitcoins being sent relative to the past few days I'm calling a trading range (again).  The cost in power to cough up a BTC at $6 even for 'cheap' power, and I'm going out on a limb thinking 3/4 of the current mining power knows this and will elect to hold coins to the bitter end at the $8 price level -- at least for a few weeks.  As always early adopters are a complete wild card and changes in their behavior overrides any technical analysis.

If we have a few weeks of $8 then another stairstep and trading range at $6 is definitely possible.

As far as the exchange hacks -- those bitcoins add up to only a week or so of mining.  Non-issue.

I agree with that post, with one caveat.  I'll also look at buying back with the funds I made selling my mined coins as soon as they were available *IF* the difficulty continues going up at the current rate.

If we have a nosedive in difficulty to 1/4 of current levels over the next 2 months and the used card market is flooded with 5 series hardware then $6 may not be a good time to get back in with cash.  It may or may not be a good time to get back in with hardware.  

A lot of this depends on the 7 series and/or availability of the standalone ASIC miner in the October timeframe.  We may see a selloff as people finance more efficient rigs in order to be competitive.

6990s are once again available on tigerdirect http://www.tigerdirect.com/applications/SearchTools/item-details.asp?EdpNo=55285&CatId=7005.  This tells me members of the BTC community are becoming more cautious and realistic with their fiat money.

What about the other side of the bull possibilities?

Bought 1k at $30 expecting $100 in August
Bought 1k at $24 expecting $40 in September
Bought 1k at $20 expecting $30 soon
Bought 1k at $17.5 'dollar averaging' down
Bought 1k at $15 because the price was stable
Bought 1k at $14 because this has to be the bottom
Bought 1k at $12 because it's a buying opportunity relative to $14
Bought 1k at $13.90 because the train is finally leaving the station
Bought 1k at $11 becase it's a better buying opportunity
Bought 1k at $9 because it can't go any lower, it's just mean bears talking BTC down wanting my bitcoins cheap
Bought 1k at $7.70 because I've already got a bunch at stake
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Now I have a buttload of bitcoins at an average price well north of $10, and them trading at $1.  That's much worse than your scenario where the trader has 5k coins at 300% current market price.  At which point all the other bulls also out of money, looking for 1000%+ to break even and miners still producing around 7200 coins a day whether the difficulty is 10 million or 10 thousand.

Now granted, this is a pretty doom and gloom scenario, but IMO at least as likely as the pie in the sky bull one based on nothing but hope and prayer.

As I understand it a pension requires working at the same company for a very, very long time.  That negates the ability to shop around if you're valuable and leaves you vulnerable to layoffs if you are not.  In my industry staying at one job for over 2 years results in an ever increasing earnings hit, and being independent can more than double earnings.

Pension plans are managed by the exact same people managing 401ks.  They're typically invested in the same stocks, bonds, etc as other mutual funds focusing on low risk and asset preservation over growth.

And finally, most of my 401ks have been rolled over into IRAs at an institution where I can trade the funds myself.

So you are factoring in a 175% return from 2-3 months of trading?  At first you will have 0 btc to trade, at the end 100%, so you're effectively looking at quadrupling your BTC stash over two months using on average 50% of your total BTC.

I won't question you massively outperforming everyone "with a tiny bit of trading", but if you are banking on such an amazing trading record why not skip building completely and invest the $1250 into BTC?  You'd be looking at far more BTC at the end of two months than that 4x5830 rig will ever mine because of compounding.  Even buying the rig at the end of 2 months instead of uprfront will still leave you with a 50% higher return.

Another way to interpret that is "I wouldn't even buy it if I could find 5830s for $110 new right now."  Which doesn't conflict with my valuing severely used, non-warrantied cards at $70 or lower.

My socket 775 P35DS3L has 4 pcie slots, as do many other budget motherboards.  It was available for around $80 when I bought it in 2008.  The E2180 CPU isn't worth much now but cost me $67 in 2008.  PCIe extenders can be bought for $3/each if you can wait 2 weeks or $12/ea if you need them fast.  PSUs sufficient for 3 cards are available under $90 constantly.  'Case' can be scrap lumber.

It's still possible to build efficiently even today if like the poster above you recycle buy GPU on sale/rebated and don't just fill a newegg cart with the latest hotness.  I believe far more people chose the expensive path, however.  And on high interest credit cards.  There are many sweating blood, no doubt about it.

As far as a hash drop:  you wish.  Deepbit is still adding about 100 Mhash/day and that figure is a bit more accurate since it's not computed from rate of solved blocks.

Hardware is not for sale yet because it's still profitable to mine.  When it gets sold it'll be on ebay and craigslist, and initially not at fire sale prices.  ATM I would not pay more than $70 for a 5830 I knew was used for mining for the last 2-3 months, would you?

Why does $1 scare you?  I absolutely don't care what the absolute price in dollars is.  $1 or $1000000000 per BTC is the same to me.  What matters is return on investment, or volatility, or stability and utility. 

Also, I'd much rather be holding BTC at $1 than at $30.  A market cap of 7 million is a far more reasonable valuation than 180+ million was.  It's a lot easier to absorb a $7200/day inflation than a $72,000 a day one.

I don't think my money is worthless.  I like money, that's why I'm not giving it away.  All my analysis points to BTC being very much overbought and overvalued at current $11 price levels, with potential to continue sliding short term.  Of course I'm putting money where my mouth is and shorting BTC to go long dollars as much as I'm able because so far my short term expectations for BTC price movement have been met.

I was going to keep some BTC for that "double or nothing" gamble, but then realized I can get more cheaper before too long.  So to the market they went.

The same bulls who saw $24 as a buying opportunity also saw $20 as a buying opportunity.  They next saw $17.5 as a buying opportunity, then $15 followed by $13, and $12, and $11, and now $9.   Not a big wonder they have little cash left to take advantage of the current sale price.

Though at some point they're going to be right.  And I believe that point is like the OP predicts, in the $6 range.  At $14 that pricing was inconceivable, and yet a 30% haircut later it's not so far fetched.

I'm with you.  I expect a $9-$11 trading range for a few weeks before we descend the next stair down.  Mining is still wildly profitable for those of us with existing rigs.  We've got 2 more months of slow pain and then a possible sharp drop when the 7 series or the promised ASIC in a box are released when people cash out to upgrade.  After that we'll see.

I believe the word he was looking for was "dead cat bounce", but hey.  Any rally in a storm.

Oh, I find it QUITE exciting.  Everyone's standing near the exit, expecting the pyramid to collapse at any moment.  People follow the bear leadership with wild abandon, the bull part not so much.   How about that bearish divergence on the volume and MACD both in the past 2 days vs anemic rally we're in?

This beats the multi-weak paralysis and flatline on every indicator handily.  Now *THIS* is an emotion driven market I can trade.