[Prediction] BTC will be at 19+USD before the reward halving

[CoinHoarder]

How I came to that conclusion:

I feel that BTC will increase to offset the reward halving.

BTC was about +3USD in the month of September.

If it continues to follow that uptrend, there will be +6USD in the next two months before the reward halving.

I cannot see having two negative months with all the exciting things happening around BTC. (ASICs being released soon + Bitinstant Credit Card)

Am I crazy or is that a foreseeable circumstance?

Discuss?

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[kentrolla]

i agree. although i think it will be higher than $19 and then there will be a disappointment crash.  then back up again

[Yuki22]

i agree. although i think it will be higher than $19 and then there will be a disappointment crash.  then back up again

I doubt it will drop, I think it will continue to go up steadily then stabilize. But we'll see!

[pretendo]

The market has already accounted for the halving. It's current price reflects this, and the market won't be surprise a few days before the halving occurs

[Realpra]

I doubt it will drop, I think it will continue to go up steadily then stabilize. But we'll see!

This is the first reward drop, I am almost certain there will be SOME kind of chaos even if only temporary.

My guess is 12-25$.

[myself]

i expect to see single digits

[notme]

i expect to see single digits

not me

[beckspace]

Only geeks will see the first reward halving, the second one however will be another beast.

[firefop]

The market has already accounted for the halving. It's current price reflects this, and the market won't be surprise a few days before the halving occurs

like fun.

The markets been undergoing a period of steady growth. We can observe the effects of that after the pirate fiasco and the resulting pump&dump, we got down to 9.50 ish before the support kicked in and drove us back over 10... and steady growth resumed.

You won't see the correction (whatever it is) for the halving until after its happened. . . and then, you may not even be noticable for quite awhile.

As a miner I don't sell coins every day, or even every week... sure every now and then I do --- but as my profits increase, I convert less and less of it to fiat. So while we might see some increase in price due to less coins being created - it's just as likely that those higher prices will entice older coins to be sold - in which case we'd just continue to see the steady growth we've been seeing.

[odolvlobo]

Nobody has even come close to explaining why they think that the reward change will affect the value of BTC.

I think it will have no (short term) effect whatsoever. There are 10 million BTC, 25 less every 10 minutes is nothing. The demand for bitcoins won't change because of the lower reward. The number of miners will drop by half along with the difficulty, but the number of bitcoins produced will still be 25 every 10 minutes.

So, tell me, why will the price change as a result of the reward being halved?

[ildubbioso]

So, tell me, why will the price change as a result of the reward being halved?

How many people will sell BTCs really near the halving? Won't they wait a little?

[Realpra]

Nobody has even come close to explaining why they think that the reward change will affect the value of BTC.

I think it will have no (short term) effect whatsoever. There are 10 million BTC, 25 less every 10 minutes is nothing. The demand for bitcoins won't change because of the lower reward. The number of miners will drop by half along with the difficulty, but the number of bitcoins produced will still be 25 every 10 minutes.

So, tell me, why will the price change as a result of the reward being halved?

Okay simple economics:
A medium risk stock paying out 10$ is worth about 100$ which gives you a nice 10% yield.
If the stock suddenly gave 20$ the stock price would quickly shoot up to 200$.

Bitcoin inflation with the current reward is ~26% so even at steady prices like now the total BTC value is increasing 25% per year.

When that inflation halves the effective yield of BTC goes way up, 12.5 percentage points, to adjust to that the price has to increase.


Why would the market be surprised?
1. 7200 BTC are created each day if 10% of that is immediately sold for $ then the reward drop leads to an immediate ~2% shortfall of BTC at mtgox which leads to a rally.
2. People valuing BTC will buy at some constant rate, like at each paycheck like myself - since the rate is usually going up, whenever we can. Even if I knew with 1000% certainty that BTC would be worth 1000$/BTC tomorrow I would NOT be able to vastly increase my buy rate.

So with constant value going IN short-term and supply sharply dropping short-term a 2% rise is near guaranteed to be a shock event. A 2% upwards shock could easily trigger a upwards correction.


Add to this deduction that alt chains experiencing reward halving DID see a price doubling - the reward change was no surprise on those alts either.

So to summarize, both logic and empirical data suggests a market shock will happen. Just because it is expected doesn't mean you can prepare!

[Atlas]

A market shock may happen due to a lot pressure from the buyers in the market wanting to purchase cheaply. When the suppliers need to recoup their recent mining investments, they will be forced to sell at a higher rate. The amount needed to recoup may be unanticipated.

[ElectricMucus]

Add to this deduction that alt chains experiencing reward halving DID see a price doubling - the reward change was no surprise on those alts either.

You mean SolidcoinII, IXcoin and I0coin? What a joke 

[odolvlobo]

Thanks for providing some concrete reasoning. Now there is something to discuss.

Okay simple economics:
A medium risk stock paying out 10$ is worth about 100$ which gives you a nice 10% yield.
If the stock suddenly gave 20$ the stock price would quickly shoot up to 200$.

Bitcoin inflation with the current reward is ~26% so even at steady prices like now the total BTC value is increasing 25% per year.

When that inflation halves the effective yield of BTC goes way up, 12.5 percentage points, to adjust to that the price has to increase.

There is no dispute here. The value of bitcoins will continue to rise, assuming that the bitcoin economy continues to grow faster than the number of bitcoins.

Why would the market be surprised?
1. 7200 BTC are created each day if 10% of that is immediately sold for $ then the reward drop leads to an immediate ~2% shortfall of BTC at mtgox which leads to a rally.
2. People valuing BTC will buy at some constant rate, like at each paycheck like myself - since the rate is usually going up, whenever we can. Even if I knew with 1000% certainty that BTC would be worth 1000$/BTC tomorrow I would NOT be able to vastly increase my buy rate.

So with constant value going IN short-term and supply sharply dropping short-term a 2% rise is near guaranteed to be a shock event. A 2% upwards shock could easily trigger a upwards correction.

Average daily volume on MtGox for the last 30 days is about 31k, but it regularly varies between 10k and 50k. Assuming your 2% is accurate, the supply will drop by only 620 (2% of 31k). I can't see how a 620 BTC drop in supply will have any effect when normal volume changes are 20 times that amount.

Another way to judge the effect of the loss of supply would be to lop off the loss from the ask side of Mtgox order book and see what happens to the price. Given the general slope of the ask side, removing 3600 BTC (the maximum possible) from the ask side will increase the price by about 0.12 BTC. Even the maximum possible supply shock does not have a significant effect on prices when compared to normal volatility.

[lucif]

it will not reach even $10 before halving