How much would it cost to drive BTC to $100?

[Arvicco]

That didn't work out too well last time did it?
It only needs a few fat finger trades to ruin it, sure $100 can happen in a flinch - the question is if it will rise further on its own. Nobody wants to overpay for an asset, no matter how good (you think) the fundamentals may sound.

Let's say you're a manager of a big tech fund looking to allocate into a new asset. It's back in 2001 and Apple just released its first iPod. You're knowledgeable enough to assess the technology and its economic implications and smart enough to see the potential of the product and the company. Your run your models and it looks all good.

The stock is out of favor though, trading at about 7.70 USD. It went through a violent bubble just a year ago, reaching 35 bucks before crushing to single digits. Not many people appreciate it, and some doubt that the company will even survive.

Do you know for sure this dog of a stock will become a 100-bagger in the next 10 years? Not really, but your models, fundamental analysis and intuition all agree that it is grossly undervalued.

Once you decided to invest, do you aggressively bid the stock up, trying to impose you vision of AAPL valuation on the market? Not really, you patiently accumulate trying not to overpay and hope that you have enough time to form your position before market reevaluates the stock.

What good is it to you if you're bidding the price up aggressively? Can you create a temporary price bubble? Quite possibly, if you possess enough funds. Will it influence other people's view of the stock? Very little, they have their own vision that evolves at their own pace. So, once you stop pumping the stock it will slide right back down where the current market consensus is. So, there is no benefit to you in it, as you cannot exit your position easily - it's just to big. You can only exit at market consensus price or even at a discount.

If you are right about the stock fundamentals and its long-term valuation, the market consensus will evolve over time and the price will appreciate long-term, regardless of temporary ups and downs, bubbles and crashes. You'll get your 100-bagger or whatever your luck is. If you are wrong, no amount of price pumping can possibly do you any good.

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[ElectricMucus]

exactly.

I like you, alone because annette786 misquoted you to create the false impression that she shares your opinion.  

[waspoza]

If you are right about the stock fundamentals and its long-term valuation, the market consensus will evolve over time and the price will appreciate long-term, regardless of temporary ups and downs, bubbles and crashes. You'll get your 100-bagger or whatever your luck is. If you are wrong, no amount of price pumping can possibly do you any good.

Too bad this forum doesn't have any score mechanism, you would have big upvote from me. 

[Arvicco]

I like you, alone because annette786 misquoted you to create the false impression that she shares your opinion.  

I don't think she did. I totally agree with her that BTC is currently grossly undervalued based on fundamentals and should appreciate quite considerably. I just happen to think that aggressively bidding price up achieves very little in terms of changing the long-term market consensus which evolves at its own pace. More importantly, it achieves little for me as an investor, unless I just plan to pump and dump the asset.

[ElectricMucus]

I like you, alone because annette786 misquoted you to create the false impression that she shares your opinion.  

I don't think she did. I totally agree with her that BTC is currently grossly undervalued based on fundamentals and should appreciate quite considerably. I just happen to think that aggressively bidding price up achieves very little in terms of changing the long-term market consensus which evolves at its own pace. More importantly, it achieves little for me as an investor, unless I just plan to pump and dump the asset.

To be honest I have no idea if BTC is undervalued or not or by what magnitude.
But that's not the topic of the discussion is it?

Oh crap I can already see that responding to this thread was a mistake. What's it with you new signups anyway, you two sound awfully sure of yourself to be authentic.

[n8rwJeTt8TrrLKPa55eU]

With most stocks, you are limited by the fundamentals of the underlying security.  With bitcoin, your fundamentals are based on making a new store of value and currency.  It's almost limitless and the primary driver is exposure and the belief that it is going to happen.   If you drive the price up buying, you will create that exposure.  It's a self-fulfilling prophecy!  

Correct.  Bitcoin is a Veblen good, like gold, with a recursive virtuous cycle based on its own price.  The higher the price goes (as long as the moves are slow and steady), the more people will believe in it, the more they will buy it, and the more the price will rise.  Marginal demand is potentially infinite.

http://en.wikipedia.org/wiki/Veblen_good

As to how to create a sustainable mania in any market, surreptitiously: human beings are like rats.  They won't trust big sudden changes, but they will believe with religious zeal and become very confident if a trend is confirmed consistently, day after day, with no significant negative feedback.  So the best way to manipulate a market to the upside (assuming you've got the funds in reserve) isn't to spend money pushing for new highs, but to lend constant support on corrections so they never develop into anything too long or major.  For instance, using this approach, the US Fed has created a 30 year UST bond bull market with a captive brainwashed audience which, rat-like, keeps pushing the "buy" lever, unable to conceive that on the 15649th push the spring will release a sharp blade that will slice them in half.

[turboNOMAD]

Arvicco, what's your profit in sharing the strategy? If your goal is to make the bears keep price low, what's the point in spreading bullish thoughts across the forums?
Just curious... 

[Crypt_Current]

With most stocks, you are limited by the fundamentals of the underlying security.  With bitcoin, your fundamentals are based on making a new store of value and currency.  It's almost limitless and the primary driver is exposure and the belief that it is going to happen.   If you drive the price up buying, you will create that exposure.  It's a self-fulfilling prophecy!  

Correct.  Bitcoin is a Veblen good, like gold, with a recursive virtuous cycle based on its own price.  The higher the price goes (as long as the moves are slow and steady), the more people will believe in it, the more they will buy it, and the more the price will rise.  Marginal demand is potentially infinite.

http://en.wikipedia.org/wiki/Veblen_good

As to how to create a sustainable mania in any market, surreptitiously: human beings are like rats.  They won't trust big sudden changes, but they will believe with religious zeal and become very confident if a trend is confirmed consistently, day after day, with no significant negative feedback.  So the best way to manipulate a market to the upside (assuming you've got the funds in reserve) isn't to spend money pushing for new highs, but to lend constant support on corrections so they never develop into anything too long or major.  For instance, using this approach, the US Fed has created a 30 year UST bond bull market with a captive brainwashed audience which, rat-like, keeps pushing the "buy" lever, unable to conceive that on the 15649th push the spring will release a sharp blade that will slice them in half.

+1 Great Post

[Arvicco]

Arvicco, what's your profit in sharing the strategy? If your goal is to make the bears keep price low, what's the point in spreading bullish thoughts across the forums?

Once you mostly formed your position, what's the point in keeping your view secret? The market consensus does need to evolve, intelligent forum discussions may help this process.

[Steve]

Great thread...people should listen to Arvicco.  If you believe in the long term fundamentals and want to accumulate, you don't want to push the price up too quickly...as it passes $15, $20, $30, etc, you want to give people that want to sell at those levels the time they need to sell at those levels.  To get to a level of $100 and sustain that price, you have to clear out everyone willing to sell at less than $100.  You can't do that if you push the price to $100 too quickly.

One other possible strategy is to create a series of mini runs and panics designed to shake out the people that don't have conviction...you don't want them hanging around as you approach $100 or it won't be a sustainable price.

To answer the original question, I bet it would take far less than $1 million to get the price to $100...if you started to manipulate the price higher, many of those bids below $100 will lift.  But it would kiss $100 briefly then retrace hard.

I always tell people to only buy what you're willing to lose...if everyone did that, then why would anyone sell for less than what they paid?  If no one sells for less than what they paid, you'll have a sustainable appreciation in the price.  It is the very definition of capital formation.

[Arvicco]

Correct.  Bitcoin is a Veblen good, like gold, with a recursive virtuous cycle based on its own price.  The higher the price goes (as long as the moves are slow and steady), the more people will believe in it, the more they will buy it, and the more the price will rise.  Marginal demand is potentially infinite.

I suppose you exaggerate a bit about infinite demand. There are ways to quantify final demand, for example here:

http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/

As to how to create a sustainable mania in any market, surreptitiously: human beings are like rats.  They won't trust big sudden changes, but they will believe with religious zeal and become very confident if a trend is confirmed consistently, day after day, with no significant negative feedback.  So the best way to manipulate a market to the upside (assuming you've got the funds in reserve) isn't to spend money pushing for new highs, but to lend constant support on corrections so they never develop into anything too long or major.  For instance, using this approach, the US Fed has created a 30 year UST bond bull market with a captive brainwashed audience which, rat-like, keeps pushing the "buy" lever, unable to conceive that on the 15649th push the spring will release a sharp blade that will slice them in half.

It is indeed possible to fake scarcity, artificially back a bogus "safe haven asset" and create a sustainable mania. If you have unlimited funds, you can even sustain this mania for 30+ years as US Fed did. But all such manias end badly sooner or later, as you seem to understand quite well.

An asset with real safe heaven characteristics (like gold), on the other hand, does not need any artificial backstops to hold its value long-term. Quite the opposite, it can even keep its value despite artificial suppression of price that most likely happened for many years.

My opinion is that bitcoin as an asset is closer in its characteristics to gold rather than UST paper. As such, it does not really need price pumping or artificial backstops to appreciate as its adoption grows.

[Rothgar]

Here's an answer to the question:  $800M.

This is the difference in market cap between a price of $20 and $100.  I'm pretty sure this is in the right ballpark.  However there is no guarantee of a profit if someone pushed the price up to $100.  You'd see the price go right back down when it came time to sell.

[FreeMoney]

I always tell people to only buy what you're willing to lose...if everyone did that, then why would anyone sell for less than what they paid?  If no one sells for less than what they paid, you'll have a sustainable appreciation in the price.  It is the very definition of capital formation.

There are plenty of reasons to sell while up or down even if you are (or were) 'willing to lose'. You might get fired, prefer a new car or get cancer etc.

[n8rwJeTt8TrrLKPa55eU]

I suppose you exaggerate a bit about infinite demand. There are ways to quantify final demand, for example here:

http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/

Yep, ultimately nothing is infinite, but hyperbole just sounds so much more exciting .  The angle I was going for is that since BTC carry no holding costs, adding one more BTC to one's wallet will always be a welcome event with no conceivable drawbacks (unlike gold, which requires storage or fees).  Hence the greed dynamic with BTC, although not infinite, is potentially even stronger than with gold, so I think the optimistic case for Bitcoin as a store of value results in a higher number than the one referenced in the (quite good) blog post you link to.

My opinion is that bitcoin as an asset is closer in its characteristics to gold rather than UST paper. As such, it does not really need price pumping or artificial backstops to appreciate as its adoption grows.

Agree completely.  I started buying Bitcoin heavily once it finally sunk into my brain that it was basically digital gold.  The bull market in BTC will continue for as long as governments wage war against freedom and privacy, i.e. for as far as the eye can see.  There will be big volatility, corrections, and scary moments along the way, but I consider BTC more of an insurance than a speculative vehicle, so I won't be selling a single Satoshi unless the macro political outlook reverses 180 degrees.

[deepceleron]

It just got more expensive to buy almost the same amount of Bitcoins up to $100: $2,698,613. Lesson: if you want to accumulate Bitcoins in a bull market, do it fast in one order; you can't sneak little orders by the sellers, they will keep on bumping up their prices.

BTW, my previous screenshot is a perfectly executed hoax, nobody has $1.3M ready to buy Bitcoins - you can crash now, market.

[theomar]

It just got more expensive to buy almost the same amount of Bitcoins up to $100: $2,698,613. Lesson: if you want to accumulate Bitcoins in a bull market, do it fast in one order; you can't sneak little orders by the sellers, they will keep on bumping up their prices.

BTW, my previous screenshot is a perfectly executed hoax, nobody has $1.3M ready to buy Bitcoins - you can crash now, market.

Lol!!! buy now or never... no matter how many $ you have.

[Vandroiy]

BTW, my previous screenshot is a perfectly executed hoax, nobody has $1.3M ready to buy Bitcoins - you can crash now, market.

Sorry to disappoint on the perfect execution, but you got the number formatting wrong.

[finkleshnorts]

I suppose you exaggerate a bit about infinite demand. There are ways to quantify final demand, for example here:

http://cs702.wordpress.com/2011/05/29/on-the-potential-adoption-and-price-appreciation-of-bitcoin-in-the-long-run/

Yep, ultimately nothing is infinite, but hyperbole just sounds so much more exciting .  The angle I was going for is that since BTC carry no holding costs, adding one more BTC to one's wallet will always be a welcome event with no conceivable drawbacks (unlike gold, which requires storage or fees).  Hence the greed dynamic with BTC, although not infinite, is potentially even stronger than with gold, so I think the optimistic case for Bitcoin as a store of value results in a higher number than the one referenced in the (quite good) blog post you link to.

My opinion is that bitcoin as an asset is closer in its characteristics to gold rather than UST paper. As such, it does not really need price pumping or artificial backstops to appreciate as its adoption grows.

Agree completely.  I started buying Bitcoin heavily once it finally sunk into my brain that it was basically digital gold.  The bull market in BTC will continue for as long as governments wage war against freedom and privacy, i.e. for as far as the eye can see.  There will be big volatility, corrections, and scary moments along the way, but I consider BTC more of an insurance than a speculative vehicle, so I won't be selling a single Satoshi unless the macro political outlook reverses 180 degrees.

Interesting, thanks for this post. I too see it as insurance. I worry little about the eminent collapse of the U.S. dollar. While such an event would have major global economic implications, with bitcoin I need not be afraid for my own financial security.

[ElectricMucus]

It just got more expensive to buy almost the same amount of Bitcoins up to $100: $2,698,613. Lesson: if you want to accumulate Bitcoins in a bull market, do it fast in one order; you can't sneak little orders by the sellers, they will keep on bumping up their prices.

BTW, my previous screenshot is a perfectly executed hoax, nobody has $1.3M ready to buy Bitcoins - you can crash now, market.

I don't think it was that well executed since you haven't got any replies worth mentioning. 
And since this is BTC and somebody wanted to brag he'd simply sign a message for the wallet.

[Arvicco]

I think this thread is worth reviving.

@OP: Feeling good now? Told you there is no need to call for manipulation, the market will come to appreciate the qualities of Bitcoin in its due time. Curious to see that this time is coming rather sooner than later...

Despite recent price spike and all the 'bubble talk' notwithstanding, I happen to think that this asset is still grossly under-appreciated. USD 1 billion 'market cap' is within a valuation range of 3rd tier technology companies such as Netgear, Evernote or Liquidity Services. And this is only if you consider BTC a 'non-traditional startup', mostly valuable for the talent of people working for it and its partners network. Which is only a small part of the story, Bitcoin's desruptive nature, its potential to revolutionize or make obsolete a whole set of industries not even starting to be reflected here.

The people calling it a bubble, especially top of the bubble... well, I hope they can live with being ridiculed for this very call for the rest of their lives.