How deep do you expect the price to fall?

[notme]

Care to explain why the minimum price is linear according to you? I mean... why not a curve? Wouldn't a curve be more likely?

I can't.
If you draw trendlines they usually fail in predictive power unless they are linear, the only explanation I have is crowd psychology. Other than that it seems completely random...

Well I would think that a (very slight) curve has its place since it represents an accelerating amount of 'hard-base users'. A linear line implies growth at the same rate. In the case of Bitcoin, which is now very slowly starting to trickle into mainstream, I see the former model as more representative; snowball style.

Forum stats show linear growth.

Also, if you want to do exponential, switch to log charts and then draw your straight line.

[molecular]

Care to explain why the minimum price is linear according to you? I mean... why not a curve? Wouldn't a curve be more likely?

I can't.
If you draw trendlines they usually fail in predictive power unless they are linear, the only explanation I have is crowd psychology. Other than that it seems completely random...

Everybody uses linear lines. That's why they work and that in turn is why everybody uses them.

[ElectricMucus]

Care to explain why the minimum price is linear according to you? I mean... why not a curve? Wouldn't a curve be more likely?

I can't.
If you draw trendlines they usually fail in predictive power unless they are linear, the only explanation I have is crowd psychology. Other than that it seems completely random...

Everybody uses linear lines. That's why they work and that in turn is why everybody uses them.

Heh haven't noticed the pun 

You know lines on a logarithmic chart and such or curves, polynomals, etc.. They don't work

[hacknoid]

Care to explain why the minimum price is linear according to you? I mean... why not a curve? Wouldn't a curve be more likely?

I can't.
If you draw trendlines they usually fail in predictive power unless they are linear, the only explanation I have is crowd psychology. Other than that it seems completely random...

Well I would think that a (very slight) curve has its place since it represents an accelerating amount of 'hard-base users'. A linear line implies growth at the same rate. In the case of Bitcoin, which is now very slowly starting to trickle into mainstream, I see the former model as more representative; snowball style.

There really seem to be three futures for Bitcoin, which I think help decide the growth in terms of value vs. fiat currency:

1) Faith in the system falters, media attention causes concern, governments try to ban/outlaw it, etc. etc. - something that prevents mainstream adoption and the abandonment by all but the die-hards.  In this case, the price would drop down and stay low.
2) Mainstream adoption doesn't really happen, but people tend to continue supporting it; value vs. the U.S. dollar would meander along, but not significantly change
3) It continues to grow and be adopted further, become more popular, and basically have a good future.  This is the likely option I see - in this case, the price would (should) rise.  How much?  Well, I would say the percentage rise would be about constant long-term, rather than the dollar value rise.  IOW, if the growth is about $1 per month now (10%), when the value reaches $100 it would be up to $10/month value increase (stilll 10%).  This would mean a curve when looking at dollar value, but a line when looking at day-over-day percentage increase. 

Over short periods of time, linear is probably a good approximation.  However, a $1 change in price at $10/BTC becomes a much less significant change at $100/BTC or $1000/BTC.

As a sidenote, I had noticed a while back that if you block out the part of the all-time graph between May and November 2011, the rest of the graph forms a nice trend.  And the only reason I even consider leaving out a block like that is because of all the hype and media attention at that time (good and bad), and basically the whole system was more immature at the time.  Not that Bitcoin is old, mature or stable yet, it simply is more than at that time.  Leaving out that noisy bubble period, the linear trendline I drew a few months back wound up around $8 for the end of 2012, which we still seem on track for, and I personally believe may be realistic. 

[justusranvier]

I only make estimations of expected exchange rates to even powers of 10 because I don't actively trade.

Based on the estimations of the amount of bitcoin-denomimated trade and the assumption that the velocity of bitcoin used for commerce is similar to the velocity in the larger economy I expect the exchange rate to be between $1 and $10 while the amount of annual bitcoin commerce is between $10 million and $100 million.

Likewise if the exchange rate ever reached the $100 and $1000 values that some people are hoping for I would consider it to be a bubble unless the bitcoin economy was supported by $1 billion and $10 billion respectively in annual commerce.

[notme]

Care to explain why the minimum price is linear according to you? I mean... why not a curve? Wouldn't a curve be more likely?

I can't.
If you draw trendlines they usually fail in predictive power unless they are linear, the only explanation I have is crowd psychology. Other than that it seems completely random...

Everybody uses linear lines. That's why they work and that in turn is why everybody uses them.

Heh haven't noticed the pun 

You know lines on a logarithmic chart and such or curves, polynomals, etc.. They don't work

But the future will always be just like today, but bigger.  Also the previous statement will always be true.

[waspoza]

I only make estimations of expected exchange rates to even powers of 10 because I don't actively trade.

Based on the estimations of the amount of bitcoin-denomimated trade and the assumption that the velocity of bitcoin used for commerce is similar to the velocity in the larger economy I expect the exchange rate to be between $1 and $10 while the amount of annual bitcoin commerce is between $10 million and $100 million.

Likewise if the exchange rate ever reached the $100 and $1000 values that some people are hoping for I would consider it to be a bubble unless the bitcoin economy was supported by $1 billion and $10 billion respectively in annual commerce.

So how you explain the fact that gold commerce is close to zero (meaning cant buy in shops for gold) and exchange rate is pretty high?

[justusranvier]

I only make estimations of expected exchange rates to even powers of 10 because I don't actively trade.

Based on the estimations of the amount of bitcoin-denomimated trade and the assumption that the velocity of bitcoin used for commerce is similar to the velocity in the larger economy I expect the exchange rate to be between $1 and $10 while the amount of annual bitcoin commerce is between $10 million and $100 million.

Likewise if the exchange rate ever reached the $100 and $1000 values that some people are hoping for I would consider it to be a bubble unless the bitcoin economy was supported by $1 billion and $10 billion respectively in annual commerce.

So how you explain the fact that gold commerce is close to zero and gold exchange rate is pretty high?

Speculative premium, which is another way of saying it's overvalued.

There's still too much speculative premium in the bitcoin exchange rate right now for me to store money I can't afford to lose as bitcoins, or to recommend it as anything other than a means of exchange only. That will change in the future when the amount of Bitcoin-demoninated trade increases.

[molecular]

I only make estimations of expected exchange rates to even powers of 10 because I don't actively trade.

Based on the estimations of the amount of bitcoin-denomimated trade and the assumption that the velocity of bitcoin used for commerce is similar to the velocity in the larger economy I expect the exchange rate to be between $1 and $10 while the amount of annual bitcoin commerce is between $10 million and $100 million.

Likewise if the exchange rate ever reached the $100 and $1000 values that some people are hoping for I would consider it to be a bubble unless the bitcoin economy was supported by $1 billion and $10 billion respectively in annual commerce.

gold is in a bubble!

[the_thing]

What the fuck... Bitfloor got hacked, there are still problems with Pirate, but the price is rising. The market is completely irrational.

[da2ce7]

What the fuck... Bitfloor got hacked, there are still problems with Pirate, but the price is rising. The market is completely irrational.

Um you mean that both the Bitfloor and Pirate debacles are already priced into the market?  That sounds extremely rational to me.

[ElectricMucus]

For now the romney event complety overshadows both pirate and bitfloor, we will know in 2-3 days if there is a followup how it is regarded, etc...

Until that has played out the bear market is suspended imo.

[knight22]

What the fuck... Bitfloor got hacked, there are still problems with Pirate, but the price is rising. The market is completely irrational.

That's only proving the market is bigger than bitfoor and Pirate

[the_thing]

For now the romney event complety overshadows both pirate and bitfloor, we will know in 2-3 days if there is a followup how it is regarded, etc...

Until that has played out the bear market is suspended imo.

what romney event do you have in mind?
EDIT : holy fuck, that thing is ridiculous. i doubt someone will pay. it's too much money for something that probably doesn't exist in the first place. but still, it's a good way to bring attention to bitcoin.

[JMAHH]

What the fuck... Bitfloor got hacked, there are still problems with Pirate, but the price is rising. The market is completely irrational.

Um you mean that both the Bitfloor and Pirate debacles are already priced into the market?  That sounds extremely rational to me.

Bitfloor priced in? Hack only happened yesterday. Unlikely.

[proudhon]

What the fuck... Bitfloor got hacked, there are still problems with Pirate, but the price is rising. The market is completely irrational.

Um you mean that both the Bitfloor and Pirate debacles are already priced into the market?  That sounds extremely rational to me.

Bitfloor priced in? Hack only happened yesterday. Unlikely.

Well, yes.  See, since "bitcoin" is essentially synonymous with "online currency the service providers of which will perpetually be subject to thefts from hacking and poor security practices" the market just already knows that some significant percentage of bitcoins will be stolen during any given month, and so, us market participants, always try to price that knowledge in.

[JMAHH]

What the fuck... Bitfloor got hacked, there are still problems with Pirate, but the price is rising. The market is completely irrational.

Um you mean that both the Bitfloor and Pirate debacles are already priced into the market?  That sounds extremely rational to me.

Bitfloor priced in? Hack only happened yesterday. Unlikely.

Well, yes.  See, since "bitcoin" is essentially synonymous with "online currency the service providers of which will perpetually be subject to thefts from hacking and poor security practices" the market just already knows that some significant percentage of bitcoins will be stolen during any given month, and so, us market participants, always try to price that knowledge in.

Touché ^^

[Adrian-x]

I only make estimations of expected exchange rates to even powers of 10 because I don't actively trade.

Based on the estimations of the amount of bitcoin-denomimated trade and the assumption that the velocity of bitcoin used for commerce is similar to the velocity in the larger economy I expect the exchange rate to be between $1 and $10 while the amount of annual bitcoin commerce is between $10 million and $100 million.

Likewise if the exchange rate ever reached the $100 and $1000 values that some people are hoping for I would consider it to be a bubble unless the bitcoin economy was supported by $1 billion and $10 billion respectively in annual commerce.

+ 1 for this

If I think about this a bit and unfortunately that is all there is regarding the Bitcoin economy, I think it is overpriced, I would expect to see an economy develop around 1:1 with the USD and when that was stable I would imagine the demand would grow organically.
But even I can't help myself from buying Bitcoin's and pushing up the price.  

I see market manipulation all over - I see somewhat well managed buy and a sell wall in the CAD, USD EU and GBP markets.

I expect even Pirate may be manipulating the market and intending paying back Bitcoin after a bubble, but my money is on a big buying frenzy after the first BTC25 block and a price hike similar to 2011 with somewhat limited demand, and then the dump of the centenary, BTC300,000-1,000,000 dumped on the market early in the new year or over Christmas 2012.

I have by Bids in at $5, but wouldn't be surprises to see it go below $2. this is pure "Speculation"

[justusranvier]

If I think about this a bit and unfortunately that is all there is regarding the Bitcoin economy, I think it is overpriced, I would expect to see an economy develop around 1:1 with the USD and when that was stable I would imagine the demand would grow organically.

Right now the exchange rate is 10% driven by commerce and 90% driven by daytraders.

This actually represents a signifigant improvement and it's improving all the time. The ratio needs to invert, though, before bitcoin can really be considered mature enough to be a store of value.

[Technomage]

The BitFloor hack has and will be completely written off as business as usual. The previous Bitcoinica hack did nothing either. This type of disaster does not affect the markets anymore. The Pirate thing is extremely overblown but it is a bigger deal than your average Bitcoin hack. Perhaps the reaction to the Pirate stuff won't be so overblown after all, which is very good.

The Romney thing is very big. It's coverage for Bitcoin in many news sites that have basically never had news about Bitcoin. Of course the story itself is probably a hoax etc but it does give Bitcoin a lot of coverage. For something like Bitcoin any press is still overall good since the main issue for Bitcoin is that it's still not well known.

If there are further developments with that story it could potentially get even bigger press for Bitcoin than Silk Road got last year. We'll see though, currently it's getting similar if slightly more than the BitInstant Debit card.