Concerned about the recent BTC price rise.

[MoonShadow]

I'm as happy that my holdings are rising as the next guy, but I admit that I cannot see the cause of it.  This kind of advance is not unprecedented within the Bitcoin economy, but the last time we were in this kind of multiple week advance it turned out to be a hype induced bubble, not the result of fundamental increases in the size of the BTC economy.  Anyone know what I'm missing?

[punin]

Maybe it's BFL's Sonny moving fiat to a more easily transportable form for his upcoming trip to Bahamas

[FreeMoney]

It's the best thing ever and the more value it can hold the better it works. Why it took 18 months and counting to put in new highs might be a better question.

[newtenberg]

The halving of the mining reward is the main cause of this rally. The new equilibrium price is above $32.

[n8rwJeTt8TrrLKPa55eU]

I'm as happy that my holdings are rising as the next guy, but I admit that I cannot see the cause of it.  This kind of advance is not unprecedented within the Bitcoin economy, but the last time we were in this kind of multiple week advance it turned out to be a hype induced bubble, not the result of fundamental increases in the size of the BTC economy.  Anyone know what I'm missing?

I'd agree with you that if the current rise was based on short-term speculative hot money from traders, then it's going to get unwound in a nasty way.

But, more optimistically, if the purchases are being done for the purpose of long-term wealth protection or store of value (there is some evidence to this, see https://bitcointalk.org/index.php?topic=136705.0), then although such purchases do not increase the size of the BTC economy, they are nevertheless quite legitimate and healthy for Bitcoin.  Similar to gold, the gold economy is nonexistent, but the store of value premium is the major component of the gold price, and I expect that dynamic to become dominant in Bitcoin as well.

[marcus_of_augustus]

You shouldn't be, it all seems pretty natural from where I'm sitting. Sure there will be a blow-off and retracement but this rally has been building for a long time .... and it is every bit as powerful as I was expecting.

The psychology of crowds is the driver ... the market sees $16 and $32 as important price points but has no real feel for anything in between at this stage. Once we cleared $16 (the August 2012 rally top) then there is no obvious point to stop going up ... until the previous rally top, $32. I don't think we'll get there but maybe. $20 is round number so probably have a pause there, maybe retrace, who knows.

Not bubbly yet, still plenty of money on the sidelines waiting to get in methinks When every one is in who is waiting to get in for now, the rally will stop.

[tjohej]

The halving of the mining reward is the main cause of this rally. The new equilibrium price is above $32.

Damn, now I have to refrain from purchasing BTC because I'm not sure if the rising price is trying to fool me into buying BTC at a price it's not worth.
It's just wait and see now.

Why is it rising? Has some new userbase seen the use of BTC and lots of people trying to get some? (demand for BTC rising?)

[notme]

The halving of the mining reward is the main cause of this rally. The new equilibrium price is above $32.

Damn, now I have to refrain from purchasing BTC because I'm not sure if the rising price is trying to fool me into buying BTC at a price it's not worth.
It's just wait and see now.

Why is it rising? Has some new userbase seen the use of BTC and lots of people trying to get some? (demand for BTC rising?)

http://www.google.com/trends/explore#q=buy%20bitcoins&cmpt=q

Yes, google searches for "buy bitcoins" are almost up to 2011 bubble levels.

In addition, GPU miners are pulling out in expectation of ASICs, so the difficulty is dropping.  This means blocks are slightly less frequent then one per 10 minutes currently, in addition to the halving of the block reward.

Less fresh supply, high demand, and major long term resistances were recently broken.  We may see a bit of volatility before we can move up much more, but I'll continue to buy my chunk with each paycheck.

[dree12]

Another speculation bubble is probably in the brew unless we stabilize at the 20 mark for a bit longer. But it looks like we might stick around here, and then have a healthy price increase. The Bitcoin economy can probably support a price near 20, but anything above is probably speculation at the moment.

Plus, it isn't even that bad. Look at the chart:



We've had much bigger in 2012, so it's premature to compare with 2011.

[Third Way]

OMGOMGOMGOMG 18 BUX!

[Bit_Happy]

Will people learn from history?
No...

Much more to do to build the real BTC economy.

[jwzguy]

Will people learn from history?
No...

Much more to do to build the real BTC economy.

Learn not to buy in? I hope not.

Just because there is more to do doesn't mean a lot hasn't already been done.

[odolvlobo]

The halving of the mining reward is the main cause of this rally. ...

... the fact that the reward has been cut in half means less bitcoins per reward, harder to mine, also means people are realizing that BTC will be harder to obtain, ...

This is a fallacy. The halving of the mining reward does not make it more difficult to obtain coins.

First, the number of coins mined each day is a small fraction of the total exchange volume. The change in the reward has only a small effect on supply, if any.

Second, this current rally does not coincide with the halving, so it is hard to claim they are related.

Most likely, the steep increase in price has been a result of the surge in articles mentioning bitcoin in the mainstream news media. I suspect/worry that there is a little bit of a bubble forming, but volume still seems reasonable.

[crazyates]

Pardon my ignorance, but I don't know what that drop off around $20 on the buy side means for the potential future price. If it gets to $20, then it'll also very quickly jump to $22? Can someone explain in a little more detail exactly how to read those graphs? Much appreciated.

[odolvlobo]

Pardon my ignorance, but I don't know what that drop off around $20 on the buy side means for the potential future price. If it gets to $20, then it'll also very quickly jump to $22? Can someone explain in a little more detail exactly how to read those graphs? Much appreciated.

The image is broken, but I assume you are looking at the Mtgox market depth graph. The height of the line indicates the amount of money it would take to move the price to that value. So, indeed it would take a lot to raise the price higher than $20, and not much more to raise it to $22. However, keep in mind that the graph is not static, every bid and ask, and every transaction changes it. Also, while it may be useful as an indicator of interest and "pressure", it is not very useful for prediction.

[mike80439]

Isn't anyone concerned that Congress added $4T debt during the Bush years and $6T during the first Obama term?  Our debt stands at over $16T and will probably rise at least $6T during the next four years.  That's $135,000 debt for each and every American.

Since the interest rate to banks is at zero, Bernanke has run out of wiggle room.  He is spending $40B/month, "buying" bonds from Fannie and Freddie with manufactured dollars.  That's almost $0.5T / year in new money printed.  Google QE3 to read more.

I, for one, am very concerned my wealth will be inflated into nothingness.  I see Bitcoins (as well as metals) as a place to park my savings.  I believe the people of Greece, Italy, and Spain see this as well.

If I were asked, I would recommend BUY and HOLD.

[crazyates]

Pardon my ignorance, but I don't know what that drop off around $20 on the buy side means for the potential future price. If it gets to $20, then it'll also very quickly jump to $22? Can someone explain in a little more detail exactly how to read those graphs? Much appreciated.

The image is broken, but I assume you are looking at the Mtgox market depth graph. The height of the line indicates the amount of money it would take to move the price to that value. So, indeed it would take a lot to raise the price higher than $20, and not much more to raise it to $22. However, keep in mind that the graph is not static, every bid and ask, and every transaction changes it. Also, while it may be useful as an indicator of interest and "pressure", it is not very useful for prediction.

Yes, I was looking at he Mtgox market depth. Thanks for that quick explanation!

[newtenberg]

The halving of the mining reward does not make it more difficult to obtain coins.

Do you have any link or reference to support this statement?

On the other hand the evidence is irrefutable:

First, the number of coins mined each day is a small fraction of the total exchange volume. The change in the reward has only a small effect on supply, if any.

Fallacy.

Fact: There are far fewer coins in exchanges. Nowadays exchanges are running out of coins.

Second, this current rally does not coincide with the halving, so it is hard to claim they are related.

Fallacy.

Fact: This rally coincides exactly with the halving.

As my grandfather used to say, "mas claro echarle agua".

I suspect/worry that there is a little bit of a bubble forming

Put your money where your mouth is -> sell all your coins !!!

[tjohej]

This was tweeted by Gavin ~two days ago.
"BitPay Surpasses 10,000 Bitcoin Merchant Transactions, Zero Cases of Payment Fraud" http://t.co/qmHd9Y7l
Maybe this is about lots of companies getting in touch with bitpay to start accepting BTC. If that's the case then I'm glad. Maybe there are many reasons for the higher price, but I need to wait until it becomes stable at least for 15 days before buying any.

[odolvlobo]

The halving of the mining reward does not make it more difficult to obtain coins.

Do you have any link or reference to support this statement?
On the other hand the evidence is irrefutable:

First, the number of coins mined each day is a small fraction of the total exchange volume. The change in the reward has only a small effect on supply, if any.

Fallacy.
Fact: There are far fewer coins in exchanges. Nowadays exchanges are running out of coins.

Second, this current rally does not coincide with the halving, so it is hard to claim they are related.

Fallacy.
Fact: This rally coincides exactly with the halving.
As my grandfather used to say, "mas claro echarle agua".

The number of bitcoins sold over the last 30 days (according to bitcoincharts.com) was 1,885,000, while the number of bitcoins mined over the last 30 days was 108,000. So, the maximum possible contribution of supply by the block reward is less than 6%, and the actual contribution is probably much less than that. That is how I support my claim that a change in the reward has only a small effect on supply, if any.

The latest rally started two weeks ago on January 8. Prior to that, it was flat for nearly a month. How does this coincide with the block reward halving two months ago.