bubble dynamics in Bitcoin

[jonald_fyookball]

bubbles can and do happen in any market.

with Bitcoin it's interesting because of the miners.
first of all, there is always downward pressure
because miners have to constantly sell coins.

But during a bull breakout like we're seeing now,
some miners will choose to hold a greater
portion of their coins since they see the price
rising.  They can do this because they are getting more
per coin for ones they do sell, thus covering
their electricity for less, and also because they may
expect price to rise further.  Because less coins are
being sold, the price rises further, feeding the cycle.

However, if this goes on too long, the mining difficulty
will rise as miners turn on more machines, thus driving
down the miners' yield, which forces more selling and
lower prices, which leads to greater sell offs across
the board.

So, the bottom line is, both the rise and fall in Bitcoin
price action is exaggerated over other markers, not
just because of the small market cap, but also by mining.

[Wexlike]

But you can't build asics as fast as the price is rising(sometimes). Furthermore when you keep the halving day in mind, it is also much better to maintain a balance regarding current and future emission and your own hashing power.

[Amph]

the demand is simply stronger now, it isn't because the miners are selling less coins, this is only a consequence that will enforce the pump, so in the remote case that miners go crazy and start dumping again, i'm sure the market will absorb all their coins at this point

a real crash would be caused by something else, manipulation from big guy, as usual...

[IIOII]

So, the bottom line is, both the rise and fall in Bitcoin
price action is exaggerated over other markers, not
just because of the small market cap, but also by mining.

I've read your explanation and the mechanism itself doesn't seem illogical. However, is there any data to support your claims? If miners speculate, why would they speculate only during breakouts / breakdowns? I mean, they could speculate anytime on rising prices and sell coins only when they have to (to cover costs).

In my opinion, the small market cap is of high significance with the main contributing factor in Bitcoin's price movements being media reporting. Because Bitcoin is still only adopted by a comparatively small group of people, even a few new buyers will have a significant impact on price.

[jonald_fyookball]

So, the bottom line is, both the rise and fall in Bitcoin
price action is exaggerated over other markers, not
just because of the small market cap, but also by mining.

I've read your explanation and the mechanism itself doesn't seem illogical. However, is there any data to support your claims? If miners speculate, why would they speculate only during breakouts / breakdowns? I mean, they could speculate anytime on rising prices and sell coins only when they have to (to cover costs).

In my opinion, the small market cap is of high significance with the main contributing factor in Bitcoin's price movements being media reporting. Because Bitcoin is still only adopted by a comparatively small group of people, even a few new buyers will have a significant impact on price.

No data, just a theory.

You're right they could speculate anytime.  You could easily argue
just the opposite of what I said.  That since the price went up,
they are trying to dump more coins to earn more cash, including
coins they had previously stashed.

I just think there may be a large segment of miners that have
been dumping at a certain level during for a long time at a certain
level while the price was stable and now may choose to take a
a wait and see approach while keeping their fiat income flat,
meaning they are dumping less coins than before.