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Question: what do you think ?
yes, another one, please - 59 (62.1%)
it has been priced in fully by now - 36 (37.9%)
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Author Topic: another hype before halving or not ?  (Read 3223 times)
bracek
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September 12, 2012, 03:10:54 PM
 #1

I don't expect price to go over 15 before new year,
it is amazing to see it holding above 10.
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September 12, 2012, 03:34:00 PM
 #2

I agree that it won't hold above $15 before New Years, but I believe we have seen the last of the single digits, at least stable single digits. We may see a few more panic sells.
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September 12, 2012, 03:50:01 PM
 #3

The halving is too far away for this to be related.

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September 12, 2012, 04:05:17 PM
 #4

I'm crossposting my analysis because I originally put it in a pretty obscure thread:

People know about it but are miners hoarding coins now waiting for the halving?  I don't think many are, its still too early.  They have bills to pay.  But if you were a miner, would you sell ANY coins 1 day before the drop?  Might as well wait to see what happens... how about 1 week before?  So expect no ask depth in the days leading up to the reward halving.

I keep reading on these forums that people think supply vs demand means a reward drop in half = a doubling of price.  But this assumes a linear x=y supply demand curve.  Depending on the flexibility of demand (i.e. gasoline is inflexible while M&Ms are very flexible) this could be very much not x=y, but x=100y or x=y/100.  To figure out what the curve really is, you have to ask yourself, how flexible is demand for BTC?


But the above argument is faulty.  It focuses on instantaneous supply.  But in fact the supply is not changing (well due to miners, it will change due to anticipatory hoarding), it is the RATE of supply increase that is changing (because bitcoins are not a consumable).  So a lack of supply on day 0 of reward halving cannot be fixed in the classical econ 101 manner by an increase in production tomorrow.  There will be a similar lack on day 1,2,3, etc.  The issue must be fixed by a reduction in demand. 

Given a constant economy, this reduction in demand can only be addressed by an increase in the price of BTC compared to other commodities.  In other words, until SR merchants, etc lower their prices in BTC to compensate for an increase in BTC price (or sell less product) we'll see a constant increase in price vs USD to meet existing demand.  And if the BTC economy is growing and currently balanced by the 50BTC reward, we'll see great pressure on the price due to lack of supply at 25BTC. 

The above is the normal negative feedback mechanism that keeps prices sane.  But if the BTC economy grows BECAUSE of an increase in BTC price (i.e. due to new interest from investors),  we could see an unsustainable positive feedback mechanism.  This will cause the hockey stick bitcoin price appreciation until the positive feedback switches back to negative (i.e. investors see BTC as overpriced).

So the block rate halving is more likely to affect (increase) the rate of long term appreciation of the value of a BTC, combined with a spike leading up to the reward halving could possibly (low chance) turn into a massive price appreciation event.  And then (regardless of whether we see a small spike or a big rise), we'll see a dump afterwards as the short term hoarding is sold.
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September 12, 2012, 04:19:51 PM
 #5

Theres still Dotcom's announcement in the queue.
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September 12, 2012, 07:03:44 PM
 #6

I could see a rally into halving event. 

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September 12, 2012, 07:11:02 PM
 #7

I could see a rally into halving event. 

+1
bracek
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September 12, 2012, 07:25:56 PM
 #8

I could see a rally into halving event. 

I would like to see a real shortage next summer,
by then coins could run dry on the ask side.
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September 12, 2012, 07:31:52 PM
 #9

The halving is creeping closer. Soon it will happen in November of this year.

There will be panic buying. Mark my words.

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the_thing
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September 12, 2012, 07:38:51 PM
 #10

I strongly hope there will be a dip until then. I sold my bitcoins a little under $11 in anticipation of huge shitstorm as an aftermath of the Pirate's scam, but the market seems to be bullish.

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September 12, 2012, 08:19:01 PM
 #11

And then (regardless of whether we see a small spike or a big rise), we'll see a dump afterwards as the short term hoarding is sold.

And every crest will see fewer people divesting all their coins and every trough will see more people buying in. It's an ingenious method of ensuring liquidity by harnessing the profit motive, as speculation is the heart of liquidity. Every new bitcoin user that isn't mining or buying bitcoins will probably be selling goods/services to get bitcoins (not counting the thieves and fraudsters), increasing the both the value and velocity of bitcoin.

This leads to what I think to be true inspiration in bitcoin's design: because the increasing supply is a known and given factor, any rise in the value of bitcoin will increase its velocity. The increase in velocity will also add to the value. They reinforce each other because they're measured against the set-in-stone rate of increase, unlike fiat where the supply is always changing at unknown rates and at unknown times for unknown reasons.

Rational money only took us 5000 years to achieve.
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September 12, 2012, 08:26:50 PM
 #12

I strongly hope there will be a dip until then. I sold my bitcoins a little under $11 in anticipation of huge shitstorm as an aftermath of the Pirate's scam, but the market seems to be bullish.

i hope you have a bid placed... any dip or crash will be aggressively bought, if you dont have a bid you wont catch it.

you better hope some one has been hording for a very long time and is now looking to buy a new house Kiss

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September 12, 2012, 08:28:47 PM
 #13

Rational money only took us 5000 years to achieve.

now... how do we sell rational money to irrational people ?

the_thing
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September 12, 2012, 08:31:46 PM
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I strongly hope there will be a dip until then. I sold my bitcoins a little under $11 in anticipation of huge shitstorm as an aftermath of the Pirate's scam, but the market seems to be bullish.

i hope you have a bid placed... any dip or crash will be aggressively bought, if you dont have a bid you wont catch it.

you better hope some one has been hording for a very long time and is now looking to buy a new house Kiss
What about ASIC? As far as I know, it is supposed to come out before halving (i don't know exactly when). If it really improves mining that brutally, the price should fall due to influx of new coins.

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September 12, 2012, 08:32:52 PM
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now... how do we sell rational money to irrational people ?

That's the hard part. I'm doing my best on this end. I think it will get easier as fiat continues to crumble and all of our friends and family that think we're nuts see us all doing a little better than they are because of the currency/commodity we use.
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September 12, 2012, 08:53:21 PM
 #16

What about ASIC? As far as I know, it is supposed to come out before halving (i don't know exactly when). If it really improves mining that brutally, the price should fall due to influx of new coins.

IMO:
ASIC (if they do work one day) will not make an influx of new coins, but will increase difficulty.
Coins flow at 1block/10mn rate, and that will stay unaffected.
The halving will cut in half the coins flux tho. As a consequence, less coins flowing in => higher prices.

BTW, the difficulty is really bumpy these days, don't you think ?

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labestiol
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September 12, 2012, 09:38:26 PM
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What about ASIC? As far as I know, it is supposed to come out before halving (i don't know exactly when). If it really improves mining that brutally, the price should fall due to influx of new coins.

IMO:
ASIC (if they do work one day) will not make an influx of new coins, but will increase difficulty.
Coins flow at 1block/10mn rate, and that will stay unaffected.
The halving will cut in half the coins flux tho. As a consequence, less coins flowing in => higher prices.

BTW, the difficulty is really bumpy these days, don't you think ?

ASICs are already there... still a small amount, but to me the increase of difficulty is not only justified by FPGAs (no proof here, just a gut feeling)
ASICs might cause a dip, because their owners will have to sell more to pay back their investments, compared to GPUs/FPGAs owner who are already in the green on their investment.
Though it could be wrong or short lived by the speculation of the rally from the block reward halving.

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Spekulatius
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September 12, 2012, 09:44:42 PM
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What about ASIC? As far as I know, it is supposed to come out before halving (i don't know exactly when). If it really improves mining that brutally, the price should fall due to influx of new coins.

IMO:
ASIC (if they do work one day) will not make an influx of new coins, but will increase difficulty.
Coins flow at 1block/10mn rate, and that will stay unaffected.
The halving will cut in half the coins flux tho. As a consequence, less coins flowing in => higher prices.

BTW, the difficulty is really bumpy these days, don't you think ?

For a short period of time (a few days) ASICs will increase the rate bitcoins are mined with strongly:

Sorry buddy, but you are wrong. The block generation rate does not stay the same over time. It averages 10 minutes (for bitcoin) or 2.5 (for litecoin), but differs from that mean nearly always. When more blocks are mined in the same timeframe, more coins are produced. The difficulty is readjusted every 2016 blocks (in both bitcoin and litecoin). If it takes more then 2 weeks in bitcoin or 3.5 days in case of litecoin to mine those 2016 blocks the difficulty is lowered, if it takes less it is increased.
Now imagine a big addition of hashpower to the network: The remaining blocks of that cycle till the 2016th will be mined much faster then before the addition of extra hashpower, because difficulty stays the same and the network is more powerful now (smarter to solve a block, you could say). Only with the 2017th block mined, difficulty is readjusted towards the desired average of 2 weeks (BTC) or 3.5 days (LTC) for 2016 blocks to be found.

Links:
https://en.bitcoin.it/wiki/Difficulty
http://www.coinconnect.org/pages/view/31636/comparison-between-bitcoin-and-litecoin

I may have overlooked something, but I am quite sure that is how it works, please correct me if Im wrong.
Cheers
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September 12, 2012, 11:03:35 PM
 #19

I strongly hope there will be a dip until then. I sold my bitcoins a little under $11 in anticipation of huge shitstorm as an aftermath of the Pirate's scam, but the market seems to be bullish.

Anyone who trades on bullshit like that deserves to get burned hard.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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September 12, 2012, 11:32:55 PM
 #20

I strongly hope there will be a dip until then. I sold my bitcoins a little under $11 in anticipation of huge shitstorm as an aftermath of the Pirate's scam, but the market seems to be bullish.

i hope you have a bid placed... any dip or crash will be aggressively bought, if you dont have a bid you wont catch it.

you better hope some one has been hording for a very long time and is now looking to buy a new house Kiss
What about ASIC? As far as I know, it is supposed to come out before halving (i don't know exactly when). If it really improves mining that brutally, the price should fall due to influx of new coins.

ASIC lowers the barrier to entry to 0.
you plug it in the wall and watch it make bitcoin.
it becomes a matter of how much money you willing to throw at your mining biz. no skills required.
this will lead to mining being more wide spread then ever b4, and profitably going to the absolute minimum.

what happens to the price because of that is anyone guess
my guess mining has even less of an effect on price.

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