[2015-04-17] CoinTelegraph - BitPay Reveals (Good) Reason Why BTC Price Is Down

[sgk]

Summary:

At the beginning of 2015, over 100,000 merchants around the globe accepted Bitcoin for payment, and over half of them used BitPay to do so. Though many of BitPay's merchants keep a portion of these payments in bitcoins, most of them convert a good portion of it to fiat. This accounts for the massive downward price swing, because there's just more bitcoins going around.

But the next bitcoin reward halving is set to take place in 2016 – from 25 bitcoins every 10 minutes to only 12.5. At this point, the number of new and available bitcoins will decrease substantially. If transaction volume is still increasing in 2016, we can expect Bitcoin's price to go up as a result.


Full Story:
http://cointelegraph.com/news/113987/bitpay-reveals-the-good-reason-why-bitcoin-price-is-down

[bryant.coleman]

I don't think that the block size will be having any effect upon the exchange rates. Even now, roughly BTC4,000 are being mined daily, but the trade volumes are more than 10 times that amount. The real reason might be something entirely different. IMO, someone is dumping a lot of coins in to the exchanges right now. I don't know who that is. Can be Satoshi... or can be the Mt Gox thief.

[LiteCoinGuy]

maybe it has no effect, then wait until 2020

i promise, there will be an effect... 

[odolvlobo]

The story that the price is dropping because merchants convert to fiat is commonly repeated misconception. The real story is that fewer people are acquiring bitcoins and current holders are spending them. Whether bitcoin holders are selling for fiat or spending on goods doesn't matter. The real issue is that they are not buying more bitcoins to replace they ones the spend.

I don't think that the block size will be having any effect upon the exchange rates. Even now, roughly BTC4,000 are being mined daily, but the trade volumes are more than 10 times that amount. The real reason might be something entirely different. IMO, someone is dumping a lot of coins in to the exchanges right now. I don't know who that is. Can be Satoshi... or can be the Mt Gox thief.

I agree that change in the subsidy will not have an immediate effect, but it will have an effect over the long term because it affects the inflation rate.

[the joint]

I think they wrote this article about 12 months too late.

This article gets my vote for the Captain Obvious award.

[PolarPoint]

This is only half of the story. Bitpay processes bitcoin one way, btc to fiat. There is an increase in volume in processes going the opposite way, fiat to btc. For example exchanges, ATM, government bitcoin auctions.

[TheButterZone]

Supply=BTC sold at market rates, not limit sells
Demand=BTC bought at market rates, not limit buys

Is the supply provided by payment processors like BitPay (who also cash out block rewards) outstripped by demand from people buying BTC?

No, so the price crashes. Duh.

The solution is No-Bid.

[EternalWingsofGod]

Supply and demand do dictate markets
It's a good decrease since it means their is foundational stability for the protocol
But that said it is not fun to see your Bitcoins worth less even if you know its good news in the long run.

[1Referee]

Instead of calling it "news" we have to say "old shit" as most people already know this. Block halving might give the price a boost, but only for how long?

There is barely fresh money comming into Bitcoin which might be an indication that after the halving we will go through current stage once again if no fresh money comes in.

Bitcoin price will only be able to recover when most merchants decide to hold the majority of the coins instead of converting them directly into fiat.

[odolvlobo]

Supply=BTC sold at market rates, not limit sells
Demand=BTC bought at market rates, not limit buys

Limit orders must be included in supply and demand because market orders are filled by limit orders.

However, the bigger point is that supply and demand are curves, and not single values. Supply and demand include all bitcoins that can be traded, which is basically all bitcoins except those that are lost or have not been mined yet. Supply and demand include bitcoins on exchanges as well as those in cold storage.

[the joint]

This is only half of the story. Bitpay processes bitcoin one way, btc to fiat. There is an increase in volume in processes going the opposite way, fiat to btc. For example exchanges, ATM, government bitcoin auctions.

I'm waiting for more paychecks.

[Bizmark13]

Why isn't CNY mentioned on the second chart? Does BitPay not operate in China? Or is there no merchant adoption in China?

Can be Satoshi... or can be the Mt Gox thief.

Most of Satoshi's coins are in identifiable addresses containing coins which if moved, would be noticeable.

Instead of calling it "news" we have to say "old shit" as most people already know this. Block halving might give the price a boost, but only for how long?

There is barely fresh money comming into Bitcoin which might be an indication that after the halving we will go through current stage once again if no fresh money comes in.

Bitcoin price will only be able to recover when most merchants decide to hold the majority of the coins instead of converting them directly into fiat.

This will take years, and possibly even decades. Most merchants have supply and distribution networks in place with other businesses, and ~99% of businesses today only accept fiat. Businesses also have real-world expenses such as rent, wages, insurance, and utilities which must be paid for using fiat. Realistically speaking, for a business to be able to pay all of these expenses using BTC, Bitcoin adoption must already be widespread.

And once Bitcoin adoption is widespread, the price would already have recovered anyway since the demand for BTC would be much greater compared to today.

[bryant.coleman]

Can be Satoshi... or can be the Mt Gox thief.

Most of Satoshi's coins are in identifiable addresses containing coins which if moved, would be noticeable.

That is correct. So it is not Satoshi who is dumping all the coins. Then my suspicion is that Mark Karpeles is dumping his 650,000 stolen coins, at a rate of some 5,000 to 10,000 coins per day.

[TheButterZone]

So, for every BTC a person spends, how any times that of BTC do they have to rebuy to counter the dumpers? LOL

[Kprawn]

So in a sense, they admit that they are part of the problem.  {They provide a service, where merchants merely accept Bitcoin and then convert it to fiat}

This is not such a big problem, as the hoarders using their coins to buy from these NEW fiat based companies, who only adopted Bitcoin to open up a new revenue source.

So we have coins being moved around {daily transactions being converted to fiat} .....Less hoarding .... No or very little NEW buyers and NEW coins being added by mining.

Summary : Lower demand than supply = lower prices.   

[drugs]

But the next bitcoin reward halving is set to take place in 2016 – from 25 bitcoins every 10 minutes to only 12.5. At this point, the number of new and available bitcoins will decrease substantially. If transaction volume is still increasing in 2016, we can expect Bitcoin's price to go up as a result.[/i]

Well logically due to supply and demand this should happen but sometimes there doesn't seem to be much logic at all in the valuation of bitcoin. It goes up and it goes down without any obvious reason but I'm hoping the halving does push the price up I just hope there's more demand for the coins by then.

[sgk]

But the next bitcoin reward halving is set to take place in 2016 – from 25 bitcoins every 10 minutes to only 12.5. At this point, the number of new and available bitcoins will decrease substantially. If transaction volume is still increasing in 2016, we can expect Bitcoin's price to go up as a result.[/i]

Well logically due to supply and demand this should happen but sometimes there doesn't seem to be much logic at all in the valuation of bitcoin. It goes up and it goes down without any obvious reason but I'm hoping the halving does push the price up I just hope there's more demand for the coins by then.

True, there is really no evident relation between coin reward and price. We were at $1100 when the reward was 25 BTC per block. And now we're at $225 when the reward is....    the same 25 BTC, lol.

But what I hope is that the DEMAND for the coins will increase regardless of the block reward. And due to more demand, the ask price should eventually go UP. But this is just a speculative hope. Nothing can be predictable in the world of crypto currency.