The issue here is that the US Government has lost a lot of credibility when it comes to money laundering, in many people's minds, by letting HSBC of the hook with at most a slap on the wrist. As a result of this a conviction in the Shrem case will be seen as an act of oppression by the US Government rather than a legitimate criminal prosecution, regardless of whether Shrem is guilty or not. A likely result will be the creation of a martyr.

Gold in terms of inflation adjusted USD http://inflationdata.com/Inflation/images/charts/Gold/Gold_inflation_chart.htm. Without even considering Bitcoin there is a very good case for a gold bear market not unlike the gold bear market from 1980 - 2000. Now add Bitcoin into the mix and the gold bear market can really get ugly.

Let us not forget that even in terms of the inflating USD the past gold bear was just brutal.

Many do not realize that gold has some very fundamental flaws as money:

1) It is expensive to accurately verify fineness and that one actually has gold rather than gold plated whatever.
2) It is expensive and risky to store and guard particularly in significant amounts
3) It is expensive and risky to transport particularly in significant amounts
4) The cost of breaking down a piece of gold into smaller pieces is not zero

In short the cost of taking delivery of the gold and delivering the gold to the market is far from zero

This has led to the use of trusted third parties to compensate for these shortcomings.

1) Have a "trusted" third party place a stamp or seal on the gold to guarantee, fineness, weight and against plating frauds
2) Deposit the gold with a "trusted" third party in many cases close to the market and use the third party's receipts as money instead.  

1 has led to the state issuing gold coinage and placing its seal on the coinage as the "trusted" third party only to have the state debase the currency by placing its seal on ever diminishing amounts of gold
2 has led to the creation of fiat paper (now electronic) money through debt based fractional reserve banking as the "trusted" third party issued more receipts than gold on deposit as interest bearing loans.

Bitcoin addresses all of the above and in addition also addressing the small but non zero risk gold has from esoteric technologies such as asteroid mining, low energy nuclear reactions (or cold fusion), extracting gold from seawater etc.

Really? Bitcoin was traded for gold back in early 2010 before MTGox opened. http://newlibertystandard.wikifoundry.com/page/Exchange+Rate The BTC exchange rates for New Liberty Standard and Bitcoin Market were in terms of 1 gram XAU via Pecunix.

Edit: Trading Bitcoin for gold is an interesting application but not a "killer app" for Bitcoin.  Ever thought of the possibility that Bitcoin could replace gold rather than replace the USD?

A good US tax professional should be able to answer this.

I am on the yes side. Consider that the Second Market Bitcoin trust will be available to small investors before then and there is also there is a good chance the Winklevoss Bitcoin ETF could get approved before then. In fact if the latter happens BTC/USD could go significantly higher than 10000.

Actually the really tricky part was avoiding a million dollar plus "goxing" of the proceeds at the eleventh hour of the MTGox collapse.

If one goes to the right side of the page and closes the graphs one finds daily data for both New Liberty Standard and Bitcoin Market in terms of 1 gram of gold via pecunix from January 16, 2010 to June 07, 2010.

With the same dataset the current regression should correspond to rpietila's model. The main advantage I can see here is that one can easily tell what the prediction would have been at points in the past without clouding the issue with data points in the future. This is actually very useful. As for criticisms those that I made with respect to rpietila's model also apply here. https://bitcointalk.org/index.php?topic=400235.msg6192769#msg6192769

If one mines BTC via Bitminter one also gets NMC because of merged mining. Consider this a bonus. I keep my NMC and then when there is a bull market in the BTC/USD rate sell my NMC for BTC.

There is data for early 2010 from New Liberty Standard and Bitcoin Market starting in January 2010. http://newlibertystandard.wikifoundry.com/page/Exchange+Rate. There is also a reference from theymos indicating he felt New Liberty Standard was over charging, and that New Liberty Standard was the most visible exchanger at the time.  https://bitcointalk.org/index.php?topic=104287.msg1143955#msg1143955. I have pointed out this data before. This data is based on 1 gram XAU via Pecunix. One can easily convert this to USD using the gold price at the time. There is little doubt in my mind that this model breaks down in 2009. I believe that an exponential model based on the market capitalization rather than price and the inclusion of the New Liberty Standard and Bitcoin Market data will address these shortcomings. The net effect of these shortcomings is to give premature sell signals. A very good example is that sell signal given at the April 2011 low in the 0.6 USD range. If one takes a close look at the graph this sell signal is comparable in strength to the sell signal given for the April 2013 high. http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zvzl.

My conclusion is that one must treat a bitcoin sell signal given by this model with extreme caution.

Edit: My arguments against rpietila's model should not be construed as making a case for the bears at this time in the market. This is a bull arguing that another bull is not bullish enough.  

Well I just cannot resist. Will BTC/USD break 1 USD or will it crash below 0.60? Here is a chart to help make that decision.

http://bitcoincharts.com/charts/mtgoxUSD#rg60zigHourlyzczsg2011-04-04zeg2011-04-12ztgSzm1g10zm2g25zv

Edit: I am getting confused. Now which past crash and subsequent recovery are we talking about here?

This would require both:

1) Running Bitcoin Core on Microsoft Windows.
2) Using the new SLL based payment protocol on a site under the control of the NSA.

https://bitcointalk.org/index.php?topic=563048.msg6174364#msg6174364.

 

This is critical in understanding the psychology of the holder. Greed and fear are reversed. Bitcoin becomes "the money" and fiat "the investment". Selling is actually driven by greed and not fear since it is done with the objective of actually acquiring more bitcoin by engaging in a buy fiat low sell fiat high strategy that more often than not can fail.

Take a look at the holders and more often than not their activity level on his forum is in the 500+ range. This is an indicator that they have been with Bitcoin since early 2012 or 2011 and in some cases 2010 or even 2009. This means they initially got into Bitcoin in the single digits or below in some cases cents or even fraction of a cent.

I suspect in addition most of the following is true:
They have managed to keep a significant portion of their initial bitcoin, other wise they would not still be around.
They have sold the rest at a sizeable profit in fiat terms but at prices far below the current market, low double digits, single digits, even below etc, and deeply regret having done so.
They have more than taken out their initial fiat investment.
They have sizeable unrealised capital gains in bitcoin that would trigger a very ugly tax bill should they sell. The depends on the jurisdiction, but would require a drop in the market in many cases over 30% just to break even.
They have been through multiple bit bull and bit bear markets.
Bitcoin may account for a very significant portion if not the majority of their net worth.
They have done their research and believe there is a very high likelihood that bitcoin will appreciate by a few orders of magnitude higher in the coming years.
They have been exposed to one or more of the following MTGox, Bitcoinica, pirateat40, another failed exchange, wallet service etc. They may have escaped unscathed or suffered a loss. This will lead to an increase fear of trusting their BTC to any exchange.  
They can sleep better, and have lower blood pressure, being long in a bear market than short in a bull market.  

All of this leads to a very high perceived risk of selling vs the possible gain of buying back at a much lower price. So the safe strategy is HOLD.

I like a portfolio allocation of 99.5% holding 0.5% day trading.

I used to total number of BTC created using the Blockchain data. One issue I am still trying to grapple with is accounting for irrevocably lost coins. I followed the model of accounting for stock splits when pricing a stock; however in the case of Bitcoin the "stock split" occurs approximately every 10 min. For example 12,629,850 BTC is "split" to 12,629,875 BTC when the next block is mined.

Take a look at the BIT. The deep pockets are buying. https://bitcointalk.org/index.php?topic=337486.0;all

Edit: So much for liquidity at the beginning of April.

Microsoft is a great example given it close to monopoly status on desktop computer operating systems and office software. From 1987 to 2000 it followed an exponential growth model just like our model. This corresponds to the adoption of the desktop / laptop PC and is a classic S curve. When the adoption reaches close to the inflection point at 50% one gets a short continuation of the exponential followed by a long term crash, when the market realizes that the exponential cannot go on for ever. At this point the exponential approximation to the S curve breaks down. For Bitcoin I would expect this to occur somewhere between 100,000 USD to 1,000,000 USD, corresponding to about 50% market adoption. Take a look at Microsoft on a log scale from 1987 onwards. https://www.google.ca/finance?q=NASDAQ:MSFT&sa=X&ei=BmJHU9zHMPP7yAHvnIGoDA&ved=0CCoQ2AEwAA Facebook on the other hand is a very poor example because when it went public it was close to saturating its market, in effect leaving very little, if anything, on the table for the retail investor.

A very similar model can be used for RCA in the 1920s and 1930s with the stock continuing on an exponential path to its peak in 1929, while the adoption of radio was at the time reaching the inflection point of the S curve. Internet stocks peaked around 2000 while Internet penetration had reached around 50% in most of the developed economies. Again a blow off to a major top close to the inflection point of the adoption S curve.

The trend is based on a model and rpietila's model has one major shortcoming. I came to this conclusion by analysing the early 2010 and 2009 data. The fact that there is something wrong here becomes clear when one looks at the graph and focuses on 2009 and early 2010. My first thought was that the data from this period was way off; however rpietila provided enough anecdotal evidence to convince me that his estimate was at least in the right ballpark. This led me to question the model instead. My conclusion is that using price for the log fit is incorrect and that market capitalization should be used instead. The impact of this is most profound in 2009. My preliminary results predict a trend-line right now of around 4000 per BTC rather than around 900 USD per BTC. It also predicted from the 2010 and later data a constant price around 0.005 USD per BTC for a significant part of 2009, vindicating rpietila's guess that I had severely questioned.