I couldn't explain it better than a member of the Slovenian Bitcoin Association, so I am quoting his post. The conclusion is that price will stay unstable due to increasing adoption? I'm not so sure. At least it need not rise proportionally to adoption... One quite simple way to look at this is Fisher's formula for velocity of money: M * V = P * T.
M is money supply (fixed in case of bitcoin), T is num of transactions (rising in orders of magnitude). So to keep the equation balanced, the price (P) can rise but so can V (velocity of money, "frequency at which one unit of currency is used to purchase domestically-produced goods and services within a given time period"). Velocity has so far in history been rather stable, but given the usefulness of bitcoin for transactions (not very disputed even among critics), I wouldn't dare say V for bitcoin is going to be stable or at the same approximate level as for regular fiat money.
That's why I'm uneasy about projections like "the use of bitcoin will increase 1000x, therefore the price will rise 1000x". I believe the first part, but I don't think the second part follows necessarily. Not a completely bad point, but in order to compensate for growing adoption, V would need to keep on rising. Exponentially, to compensate for exponentially rising adoption/usage. Not likely. Probably impossible in fact, considering the technical limitations and tradeoffs of the network. In a thread a while ago, I made a (relatively simplistic) argument that, if Bitcoin is used as a method for Internet payments (and only for that) on the order of yearly Paypal volume today - a comparably modest goal, I'm sure you'll agree - and making a few extremely conservative estimates for the necessary parameters involved (including V), we arrive at a valuation of around $2000 per unit. The single biggest not-so-conservative assumption I am making is that those transactions are actually taking place on chain, not off chain, which could be an (unfortunate, because trust requiring) development. ( Link to my post, the calculation is under Addendum #2) Back to the topic: I set V_year = 10, which is a conservative value considering that actual velocity of Bitcoin is probably a lot lower currently. M1's V_year seems to be able to reach into the range of 10 ( WP link), but usually is lower, so if the Bitcoin network would be stable anywhere 10 it'd be a) pretty efficient, and b) the argument you mention, that increased adoption and usage doesn't lead to proportionally higher valuation, doesn't hold. |
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although an older revision of his WP article said that he's a major crypto investor
Yeah, I cannot deny that my views on bitcoin and bitcoiners were noticeably amplified by that incident, in spite of my efforts to maintain an objective view of the topic.  Man, that's pretty meta... so without the vandalism claiming you invested already you would have invested by now! THAT'S BULLISH! |
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but at least he (Fonzie) claims to be making various investments in BTC.... and you?
You mean, help pay for Winklevum and Winklevee's new Ferrari? Sorry, I am not smart enough for that. Jorge, your posts are high quality and usually accurate, in fact it is I consider you one of the most close to reality poster (oda.krell is also a good poster) , you know people hate the truth or what goes against their will/wish, don't bother so much with them and please keep your posts coming, I really enjoy reading them. Hey, at least I'm long currently. Don't think the same can be said about Jorge (although an older revision of his WP article said that he's a major crypto investor, despite what he claims in here) |
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The reality is, I am in trading mode because I am an impulsive character and I have too much time on my hands this summer. Definitely not a generally advisable plan although I've gotten much, much better at it than when I started.
Hey Newbie1022. Don't listen to the hodl trolls, now is the time to trade. (actually, always is the time to trade, if you can spend some time on it and are willing to learn). That said, here's some advice I wish someone would have given me: Historically, Bitcoin greatly favored holding coins (which is why so many in here believe in pure buy & hold). So a lot of us heard about Bitcoin, got excited, bought in -- and them some of us started trading. The advice I consider extremely useful: don't trade with your entire position from the beginning. You should rarely go "all in" anyway because of risk control, but even the size of your trading account that you consider for individual order size should only be a fraction of your entire Bitcoin account, imo. Say, you start with 10% of your Bitcoin account. Had a profitable month? Double that percentage. Made a loss, cut it in half. You get the idea. It's the "probation" period for you as a trader, and it allows you to, as you say, learn the ropes without incurring major losses through bad decisions. However, since the situation is looking a lot more bearish now than a month ago imo, the default position of keeping the rest of your Bitcoin account in coins is maybe not the best advice either. But whatever you decide in that respect, I suggest to not actively (i.e. daily, or weekly) trade with the entire account, unless it is small enough that it really doesn't matter. |
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I am not sure I wrote correctly "inflection" (not naturally english spoken). I mean this - in June ma200 stopped rising and began to fall.  "Inflection point" is correct imo. Here's the comparable 2011 view.  |
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For me it's the exact opposite, but that's because of things like this: http://www.reddit.com/r/BitcoinMarkets/comments/2dohjg/im_josh_rossi_from_bitfinex_here_to_talk_about/What I like about them is the BTC transparent audits, but I really dislike their selective meddling in matters. They're overprotective of lenders and won't let them assume any risk which they proved in February when they reversed people's trades who bid low. Now they're speculating with regards to arbitrage @ Bitstamp (What are they going to do if Bitfinex grows even more and there is hardly anyone to arb with?) and deciding whose orders should be slowed when that could cost the trader. This is a slippery slope and I don't want to see where it will end up. When I trade Bitcoin, I don't want to have to predict the actions of the Bitfinex team. Bitfinex is nice for lenders and for people who like margin; for me personally, not so much. Mhm. I read that one as well. Part of the reason I said, my opinion's more favorable of them lately. Here's my take on it: I don't like meddling by the exchange with the market either. In an ideal platonic realm of instantaneous order execution, zero fat fingers, and guaranteed lack of insider knowledge on the position of leveraged positions, there should be zero interference, granted. However, that's not the case. Finex is trying to navigate this situation, and I see their current approach (slowdown, like a selective circuit breaker) as far from ideal, but a huge improvement over what happened last time (when they reversed trades). This market is thinly traded, and offering leverage in that environment is perhaps a mistake to begin with. But seeing that their volume is growing, and the drop of two days ago (whether it was a margin call cascade or not) was comparably contained, I'm concluding they're doing okay. That said, what I'm planning to put into finex is a fraction of what I'd keep in stamp. The latter is, imo, still the "safest" of the big exchanges, if for no other reason that they don't offer leverage. |
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Looking pretty good short term. I think Bitfinex is dragging the others up as people re-leverage.
Finally some volatility again! Yeah, turns out that Bitfinex actually can lead the market nowadays. Even the Chinese are following. Say what you want about their code base etc, but the past few days have actually improved my opinion of finex. I'm even re-filling my account there (after leaving about 3/4 year ago when I was angry at their pr dude) |
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The whale manipulators are at it again! /s
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Gang, I must admit that I am a bit confused at this point. We broke the $505 resistance mark on Bitstamp which is very bullish, but we only did it for a very short period and only slightly. In the meantime, China has not emerged past their key resistance points. Thus, there are contradicting indicators.
At the same time, we broke $505, right? This really should be the end of the storm. I want thoughts from people in response. Not frantic words of BUY BUY BUY or SELL SELL SELL... just thoughts. What are you all seeing (with details)?
You want serious thoughts on price in the Wall Observer thread? You must a newb.. oh wait. Alright. Personally, I don't see much of a chance for a more serious bounce back up yet. There's only very low volume on the counter moves up, today's entire daily candle outside lower BB, and we're only in day 5 of this severe trend (and they tend to last longer once they gather speed like the current one). I'll grant we are drastically overbought, so there is certainly potential for some bounce back, but I suspect we have another day or two of decline ahead of us before that happens. |
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monkey is disturbed by world war three. he's confused and out of the market. that means i hold.
... which answers my earlier question. Too bad that monkey is chained up in the basement instead of being allowed to trade. He seems competent enough. |
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There's a simple question: If over the course of a couple weeks, supply (BTC) increases and demand (USD) decreases, would you have us not adjust prices because that would be "manipulation"?
Also, if manipulation is so easy, why aren't the Winklevosses or other large holders who are no longer accumulating doing their own manipulation upwards?
It's really getting pathetic, guys.
Your post, Like pissing into the wind of stupidity. Too bad, It is you who will get wet. (sorry for the wrong syllable count and lack of seasonal reference ) |
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Even deliberate selling to move prices down requires coins. You are putting way too much faith in the integrity of the exchanges and third part wallet services. There is nothing that stops Bitstamp (deliberately or via subversion) from giving sellers infinite paper btc to trade with. They can get away with it as long as most people don't try to withdraw their coins. If they suddenly started making it hard for people to get their bitcoins back, that would be a possible indicator of this. There is also nothing that stops Coinbase from loaning out customer btc deposits to short sellers. We'd never know if they had done so. I really don't understand this... I know you as a reasonable, knowledgeable poster. And, yes, what you describe is a possibility, but so is the claim that the entire 2013 rally was driven by Willy (which I don't believe either, for the record). So why is it so hard to entertain the possibility that we're seeing the breach of the dam as a result of built-up selling pressure? We had a good rally to $680, from there on things started looking difficult, selling pressure was extremely subdued at first (for a number of reasons, but imo, mainly because the "hodl" mantra actually took hold - no pun intended), but without further fiat inflow and subsequent positive price action, it is only a matter of time before the sell-offs kick in. Or am I being naive for considering this the most likely reason for what we're seeing now? |
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(Preliminary remark: I usually avoid posting in self-moderated topics, but I'll make an exception this time. Let's see how this turns out.) Not going to argue with the body of your post. Several valid points, though I continue to believe that predicting future price levels by simple extrapolation from the all-time price regression is extremely optimistic, and in all likelihood: too optimistic. Which doesn't change the main point you seem to make, similar to Devin Chow's point in his thread yesterday - that if you believed in the long-term potential of Bitcoin a week ago at $590, there's no need to panic sell now at $490. That said, your title bears no causal (or even just argumentative) relation to the body of the post. And, non-surprisingly, it is proven wrong already, less than 24 hours later. Sometimes, technical causes take over in a market, and the fundamentals are on the backburner for a while. Now seems to be such a time, and it is perhaps best to prepare yourself for the (likely) effects of that. |
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Well done idiots. Another crash. Is everybody happy now or what? 90 dollars wasn't enough yet? Till what point do we have to crash for people to say ok this is enough?
But that's not where we are going.
Bitcoin is over. It is dead. You still don't get it? Everyone is getting out.
I know you're just trolling, but there's only two days between the two posts. Some consistency, maybe? |
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monkey constantly changes his mind. that was a very strong intraday buy signal from the monkey, but every time a new data point comes in, he is re-evaluating. Here's my reading: When he saw the downtrend end, he thought it would rebound sharply, but instead it went sideways, so he reset his internal model to "now we are sideways". he expected a V-bottom, but he was wrong. We got a flat bottom.
he hasn't changed his overall daily bearish view, held since we broke down below 577 on the 11th. but now he is starting to expect a turn confirmation on a daily basis to come soon. That's a vague-ish "soon" meaning 0 to 5 days.
He's actually short on a weekly basis now (not just bearish, but short), for the first time since september 2011, expecting at least 6 weeks of downtrend before a reversal, but he won't be shy to change his mind if the downtrend fails.
He estimates 6 to 18 months before a manic top.
So, you're now trading on your "monkey's" advice? Or is he chained up in the basement, while the hodler long-term cryptoptimist in you rejects selling even a single coin? |
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Great find. “We think the closest thing is commodity money, like shells or deerskin,” Moriarty said. That should become our slogan ...  Bitcoin. 21st century Deerskin.™ |
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Adam, how about a poll like:
Above $500
or
Below $500
at the end of the day?
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Been an interesting day. Would like to say we're done with the move, but I can't honestly claim I see that. Maybe if we draw a line at 511/2 and stay above. More likely, imo, that over the next few days we enter the 400s and stay there for a while. Wouldn't be the end of the world either if that happens.
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Regardless, Risto could be drinking his wine in his castle and ignoring these threads completely.
Which, in some situations, would probably be better for everyone involved, cf. breakfast liver and Jacuzzis. |
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