Price has inertia, bitcoin price has upward inertia

[johnyj]

Random walk theory indicated that most daily buyer and seller actions cancel each other on the market, so long term wise the price would be stable without major change in market condition, e.g. price have inertia

Another explanation: Most of the people have no idea if an exchange rate is right or wrong: Why should gold cost 35.5K dollar per 1000g? No one knows, it is just a price they get from the exchanges, and they suppose this is the right price decided by market supply and demand

However, once they have this price information, when price rise fast, they will see it is more expensive now, they profited quickly, they will sell some. And when price dropped, they will think it is cheaper now, and buy some. Those actions will keep the price balance at a stable level


Bitcoins exchange rate can rise dramatically during a major rally. However, when the rally is over, it will usually stay at a much higher level, even without all the capital inflow support from the rally

This is because: When exchange rate is rising, mining margin is getting bigger, miners will add more hash power, that will raise the difficulty, and raise the cost of the coin, and the price become more reasonable

However, when rally is done, exchange rate is falling, there won't be same amount of mining power going offline, simply because they have already ROIed, or not everyone will sell their coin immediately for profit/loss. As a result, the network difficulty and the cost of mining now stays at a much higher level than before, which created a "it cost much more to mine now" feeling for every one, so people are less willing to sell

I found out that most of the people's market decision is based on their psychology, and cost is no doubt the most strong psychology support for valuation. This is not saying that the difficult and cost would never go down, it is just they don't go down as fast as they go up

[MinerHQ]

I think theory of bitcoins movement is not fully correct. Can you explain why prices came down from around 1000 to 200 range? You said that it will go up more and come down less.

[botany]

Another explanation: Most of the people have no idea if an exchange rate is right or wrong: Why should gold cost 35.5K dollar per 1000g? No one knows, it is just a price they get from the exchanges, and they suppose this is the right price decided by market supply and demand

However, once they have this price information, when price rise fast, they will see it is more expensive now, they profited quickly, they will sell some. And when price dropped, they will think it is cheaper now, and buy some. Those actions will keep the price balance at a stable level

Demand and supply are not data points. They are curves, which are functions of price. So when suddenly people start buying more, the demand curve shifts Sure, people start selling more - This is because supply is a function of the price. This does not keep the price balanced at stable level, it shifts the equilibrium point  of the demand-supply curve.

[worldinacoin]

You are all talking stochastic, there is basically no good way of prediction of up or down.

[Possum577]

This is because: When exchange rate is rising, mining margin is getting bigger, miners will add more hash power, that will raise the difficulty, and raise the cost of the coin, and the price become more reasonable

However, when rally is done, exchange rate is falling, there won't be same amount of mining power going offline, simply because they have already ROIed, or not everyone will sell their coin immediately for profit/loss. As a result, the network difficulty and the cost of mining now stays at a much higher level than before, which created a "it cost much more to mine now" feeling for every one, so people are less willing to sell

Your premise is certainly valid, but the question I have is the volume of bitcoin being sold by miners (after having been mined) great enough to influence the price? My hunch is no, but I don't have the data to back that up. Do you know the volume of bitcoin miners are mining and then selling to influence the price?

Remember, the mining of bitcoins doesn't influence the price, only the purchase or sale can influence the price.

[lady Royal]

You grasp good points but forget to point out the some of the major reason in the prices of the entire thing.
Gold price seen to fall down when one country attack other one (in war), and so keep on high level until the war settle. This year gold hit its peak after so long time...
This is one of the major reasons in fall of gold price...


   

[qiwoman2]

There is less and less Bitcoin being mined and more and more holders of the coin are moving the markets, day traders and long time hoarders so now it is less likely to have a massive uptrend for a while until we get more newbies involved.

[Hazir]

There is less and less Bitcoin being mined and more and more holders of the coin are moving the markets, day traders and long time hoarders so now it is less likely to have a massive uptrend for a while until we get more newbies involved.

What are you talking about - less bitcoin mined = price increase, not otherwise! The same with holders, if they hold bitcoins this has not negative impact on price, but in case they will spend their coins price can go down.

[odolvlobo]

There is less and less Bitcoin being mined and more and more holders of the coin are moving the markets, day traders and long time hoarders so now it is less likely to have a massive uptrend for a while until we get more newbies involved.

What are you talking about - less bitcoin mined = price increase, not otherwise!

Technically, not correct. Less bitcoin mined really means less downward pressure on the price. Depending on how you look at it, either the dilution of the money supply is less or the supply curve moves to the right more slowly.

[cellard]

I think theory of bitcoins movement is not fully correct. Can you explain why prices came down from around 1000 to 200 range? You said that it will go up more and come down less.

Because people can't properly value Bitcoin due it being too new and suddendly decided that 1000 was not enough. Also, manipulation, lots of it. Few whale people holding coins and dumping due being scared. It will take some time for us to reach a steady grow.

[johnyj]

I think theory of bitcoins movement is not fully correct. Can you explain why prices came down from around 1000 to 200 range? You said that it will go up more and come down less.

$1000 is an overshoot from the MTGOX market manipulation, and $200 is close to the lowest possible cost to mine a bitcoin at that time. It went up more (from 50 to 1000) than went down (from 1000 to 200)

[johnyj]

Another explanation: Most of the people have no idea if an exchange rate is right or wrong: Why should gold cost 35.5K dollar per 1000g? No one knows, it is just a price they get from the exchanges, and they suppose this is the right price decided by market supply and demand

However, once they have this price information, when price rise fast, they will see it is more expensive now, they profited quickly, they will sell some. And when price dropped, they will think it is cheaper now, and buy some. Those actions will keep the price balance at a stable level

Demand and supply are not data points. They are curves, which are functions of price. So when suddenly people start buying more, the demand curve shifts Sure, people start selling more - This is because supply is a function of the price. This does not keep the price balanced at stable level, it shifts the equilibrium point  of the demand-supply curve.

What you said is exactly what I meant, when the price shoot up, the demand-supply balance is broken, demand gets lower while supply gets higher, thus will drag the price down back to the starting point, not exactly back to origin, but still can keep a stable level

You have a very good point: It is the price that affect supply and demand, not the other way around. So by manipulating the price you would be able to change supply and demand

[johnyj]

This is because: When exchange rate is rising, mining margin is getting bigger, miners will add more hash power, that will raise the difficulty, and raise the cost of the coin, and the price become more reasonable

However, when rally is done, exchange rate is falling, there won't be same amount of mining power going offline, simply because they have already ROIed, or not everyone will sell their coin immediately for profit/loss. As a result, the network difficulty and the cost of mining now stays at a much higher level than before, which created a "it cost much more to mine now" feeling for every one, so people are less willing to sell

Your premise is certainly valid, but the question I have is the volume of bitcoin being sold by miners (after having been mined) great enough to influence the price? My hunch is no, but I don't have the data to back that up. Do you know the volume of bitcoin miners are mining and then selling to influence the price?

Remember, the mining of bitcoins doesn't influence the price, only the purchase or sale can influence the price.

Most of the mined coins are not sold. However, mining bitcoin is almost the same as buying bitcoin, currently daily 3600 coins would take a large part of the daily coin supply of 5000-7000 coins (see my signature for detailed modelling), so the affect is still significant. Maybe after next reward halving the mined coins will have less affection on the market price

[HarHarHar9965]

You grasp good points but forget to point out the some of the major reason in the prices of the entire thing.
Gold price seen to fall down when one country attack other one (in war), and so keep on high level until the war settle. This year gold hit its peak after so long time...
This is one of the major reasons in fall of gold price...

War has never benefited anybody except the ammunition industry, lives are lost and history teaches us that there is nothing peaceful after a war. The country with the best resources and trustful allies wins wars and that is the very reason United States is considered the most superior country, the very reason why the amount of their debt doesn't matter know. damn diplomatic.

[lady Royal]

You grasp good points but forget to point out the some of the major reason in the prices of the entire thing.
Gold price seen to fall down when one country attack other one (in war), and so keep on high level until the war settle. This year gold hit its peak after so long time...
This is one of the major reasons in fall of gold price...

War has never benefited anybody except the ammunition industry, lives are lost and history teaches us that there is nothing peaceful after a war. The country with the best resources and trustful allies wins wars and that is the very reason United States is considered the most superior country, the very reason why the amount of their debt doesn't matter know. damn diplomatic.

hey mate i wasn't meant to say that war is beneficial for any one .... defiantly its not... but in this i have shared an Scenario about gold prices ,what happens to gold prices in war. 

[SebastianJu]

The question is... can you make this to use to predict the price movements of bitcoin? I think that's the holy grail of every observation of the price development. So when you can put this to good use and your theory is right then you could get rich.

Maybe i misunderstood what you mean too only too.

[johnyj]

The question is... can you make this to use to predict the price movements of bitcoin? I think that's the holy grail of every observation of the price development. So when you can put this to good use and your theory is right then you could get rich.

Maybe i misunderstood what you mean too only too.

If bitcoin does not fork into pieces like we are risking to see now, then it is very likely its fiat price will just rise together with anything else, and a little bit faster due to fixed supply outlook

[botany]

Another explanation: Most of the people have no idea if an exchange rate is right or wrong: Why should gold cost 35.5K dollar per 1000g? No one knows, it is just a price they get from the exchanges, and they suppose this is the right price decided by market supply and demand

However, once they have this price information, when price rise fast, they will see it is more expensive now, they profited quickly, they will sell some. And when price dropped, they will think it is cheaper now, and buy some. Those actions will keep the price balance at a stable level

Demand and supply are not data points. They are curves, which are functions of price. So when suddenly people start buying more, the demand curve shifts Sure, people start selling more - This is because supply is a function of the price. This does not keep the price balanced at stable level, it shifts the equilibrium point  of the demand-supply curve.

What you said is exactly what I meant, when the price shoot up, the demand-supply balance is broken, demand gets lower while supply gets higher, thus will drag the price down back to the starting point, not exactly back to origin, but still can keep a stable level

You have a very good point: It is the price that affect supply and demand, not the other way around. So by manipulating the price you would be able to change supply and demand

Yes, in a developed and efficient market, price manipulation would not be possible. If somebody does try to manipulate markets, he would get caught and be prosecuted. Unfortunately, that doesn't happen in crypto-markets.

[RealBitcoin]

Random walk theory indicated that most daily buyer and seller actions cancel each other on the market, so long term wise the price would be stable without major change in market condition, e.g. price have inertia

Another explanation: Most of the people have no idea if an exchange rate is right or wrong: Why should gold cost 35.5K dollar per 1000g? No one knows, it is just a price they get from the exchanges, and they suppose this is the right price decided by market supply and demand

However, once they have this price information, when price rise fast, they will see it is more expensive now, they profited quickly, they will sell some. And when price dropped, they will think it is cheaper now, and buy some. Those actions will keep the price balance at a stable level


Bitcoins exchange rate can rise dramatically during a major rally. However, when the rally is over, it will usually stay at a much higher level, even without all the capital inflow support from the rally

This is because: When exchange rate is rising, mining margin is getting bigger, miners will add more hash power, that will raise the difficulty, and raise the cost of the coin, and the price become more reasonable

However, when rally is done, exchange rate is falling, there won't be same amount of mining power going offline, simply because they have already ROIed, or not everyone will sell their coin immediately for profit/loss. As a result, the network difficulty and the cost of mining now stays at a much higher level than before, which created a "it cost much more to mine now" feeling for every one, so people are less willing to sell

I found out that most of the people's market decision is based on their psychology, and cost is no doubt the most strong psychology support for valuation. This is not saying that the difficult and cost would never go down, it is just they don't go down as fast as they go up

Bitcoin price has upward inertia, as in a more math language, positive expectancy of price increase.

However the variance, is huge (due to imbecile development team's inability to reach a compromise), which and other events, black swans, causing bitcoin's price to always hit back 200€

I start to think that deliberate sabotage is happening , i mean what is the chance of coincidence?

First MT GOX, then SILK ROAD, then BITLICENSE, now the BLOCK SIZE? Man fucking saboteours are fucking up the bitcoin price deliberately!

[zimmah]

I think theory of bitcoins movement is not fully correct. Can you explain why prices came down from around 1000 to 200 range? You said that it will go up more and come down less.

1000 was only achieved for a few days at the top of the boom, before that it was around $150. Even after the $1000 peak bitcoin stayed around $500 and later $300 for quite a while. There has been a lot of negativety as well.

Even while the $200 price seems low right now, it's still higher than what is was before december 2013.

If there will come a new boom (and it's likely that it will happen eventually) it's also very likely that the price will never return below $300 again after having boomed to over $1000. For example it might boom to $4000 and slowly drop to $1000 or even $500, but it is unlikely to ever reach below $300.

First MT GOX, then SILK ROAD, then BITLICENSE, now the BLOCK SIZE? Man fucking saboteours are fucking up the bitcoin price deliberately!

even if this is true, it will not be possible to keep it up down forever.