Explanation for BTC price surge?

[abbyd]

I'm no expert on financial markets, so can anyone explain the strong upward trend in BTC/USD?
My current theories are (not mutually exclusive, in descending order of likelihood):

* big shot financial people joining speculation
* positive press coverage creating a seller's market
* people hedging against impending fiat currency inflation
* bitcoin is becoming more useful for money laundering
* someone is trying to corner the market (NOT NECESSARILY FOR PROFIT)

On this last point (keep in mind that I regard this as the least likely cause of the up-rush) -
I do find it plausible that a large monetary entity could be fearful of bitcoin. In this scenario,
it would make sense to soak up as many bitcoins as possible to take them out of circulation.
Basically they would be seeking to stall the bitcoin economy. A few hundred million is nothing
to a huge financial entity.

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[lucif]

Look at s&p500 for past two months and look at Bitcoin. It's a wall street bucks.

[abbyd]

Look at s&p500 for past two months and look at Bitcoin. It's a wall street bucks.

Definitely a correlation there, but bitcoin has almost doubled since Jan '13.
Also I wouldn't be surprised if bitcoin was going up while the market is heading
down.

[🏰 TradeFortress 🏰]

#5 is ridiculous. You don't exactly kill bitcoin by buying up a large amount of bitcoin.. that just increases the value of everyone else's.

[BitcoinRate.com]

#1 reason of the surge in my opinion is people don't want to miss the boat and see prices rise every day - reinforcing that feeling, making people buy, reinforcing the surge. And round and round we go - until this bubble collapses.

Don't get me wrong, I love bitcoin and all it's possibilities and advantages, but the surge we see right now however is in my opinion a classic bubble - not anything in particular of the 5 things you mention.

[lebing]

Sigh, how many threads do we have to see like this.

It's the market finally catching up with the organic growth & big speculative news we've seen over the last few months. Just look at google trends, the casino announcement in the US, wordpress etc.

[Xian01]

It's the market finally catching up with the organic growth & big speculative news we've seen over the last few months. Just look at google trends, the casino announcement in the US, wordpress etc.

 I disagree. This is not the market catching up. This is something else. Feels like a classic bubble brought on by irrationality.

 I hope I am wrong.

[lebing]

It's the market finally catching up with the organic growth & big speculative news we've seen over the last few months. Just look at google trends, the casino announcement in the US, wordpress etc.

 I disagree. This is not the market catching up. This is something else. Feels like a classic bubble brought on by irrationality.

 I hope I am wrong.

Coinbase did over a million dollars last month (and they are just barely open now). This alone is insanely bullish, not bubblish.

[Xian01]

This alone is insanely bullish, not bubblish.

So there we have it then ? This bubble brought to us by insane bulls ?

[arepo]

It's the market finally catching up with the organic growth & big speculative news we've seen over the last few months. Just look at google trends, the casino announcement in the US, wordpress etc.

 I disagree. This is not the market catching up. This is something else. Feels like a classic bubble brought on by irrationality.

 I hope I am wrong.

i too am suspicious of organic growth alone being the sole motivator of 500% ROI yearly growth.

i was trying to talk about this over in the economics mainforum but i just got shat on. it's partly a deflation event. the google trends data is telling; demand is growing rapidly but supply is limited.

[mufa23]

Back in September, I knew it was going to spike shortly after the New Year due to all the ASIC's coming out. I originally guessed the end of January back then, so I guess I wasn't too far off. Even guessed it would be $25~. Buyers are trying to get some last few coins before ASIC really hits the pools. And miners aren't selling, cause we all know it going even higher than $25. Difficulty is going to go up 20 fold, and everyone's going to be selling off their videocards and/or switching over to Litecoin. You "might" see a surge in LTC in the coming months. I already anticipated this awhile back, and bought a ton. So hopefully both my Bitcoin and Litecoin are soon going to worth a whole hell of a lot more.

[YipYip]

Back in September, I knew it was going to spike shortly after the New Year due to all the ASIC's coming out. I originally guessed the end of January back then, so I guess I wasn't too far off. Even guessed it would be $25~. Buyers are trying to get some last few coins before ASIC really hits the pools. And miners aren't selling, cause we all know it going even higher than $25. Difficulty is going to go up 20 fold, and everyone's going to be selling off their videocards and/or switching over to Litecoin. You "might" see a surge in LTC in the coming months. I already anticipated this awhile back, and bought a ton. So hopefully both my Bitcoin and Litecoin are soon going to worth a whole hell of a lot more.

Shhh !  ...

[siggy]

It's the market finally catching up with the organic growth & big speculative news we've seen over the last few months. Just look at google trends, the casino announcement in the US, wordpress etc.

 I disagree. This is not the market catching up. This is something else. Feels like a classic bubble brought on by irrationality.

 I hope I am wrong.

It feels to me like someone "knows something" and is accumulating in anticipation of some major announcement.. If I had to make a completely unsubstantiated guess.. I'd say some major online gambling site is going to start taking bitcoins soon, and the insiders are stocking up in anticipation of the major price spike they expect this will cause.

Sigg

[evoorhees]

Back in September, I knew it was going to spike shortly after the New Year due to all the ASIC's coming out. I originally guessed the end of January back then, so I guess I wasn't too far off. Even guessed it would be $25~. Buyers are trying to get some last few coins before ASIC really hits the pools. And miners aren't selling, cause we all know it going even higher than $25. Difficulty is going to go up 20 fold, and everyone's going to be selling off their videocards and/or switching over to Litecoin. You "might" see a surge in LTC in the coming months. I already anticipated this awhile back, and bought a ton. So hopefully both my Bitcoin and Litecoin are soon going to worth a whole hell of a lot more.

Why do people keep saying this??  ASIC has nothing (or little) to do with the price of bitcoin. It does not change supply. Even if people were buying coins to purchase ASIC's, those coins are being sold for USD.

The only real effect ASIC can/should have on the market price is that they make the network safer. This fact alone doesn't justify a doubling of the btc price though.

There are lots of reasons why the price is high right now, it has nothing to do with ASIC's or mining in any way.

[evoorhees]

It's the market finally catching up with the organic growth & big speculative news we've seen over the last few months. Just look at google trends, the casino announcement in the US, wordpress etc.

 I disagree. This is not the market catching up. This is something else. Feels like a classic bubble brought on by irrationality.

 I hope I am wrong.

It feels to me like someone "knows something" and is accumulating in anticipation of some major announcement.. If I had to make a completely unsubstantiated guess.. I'd say some major online gambling site is going to start taking bitcoins soon, and the insiders are stocking up in anticipation of the major price spike they expect this will cause.

Sigg

Very possible.

[wormbog]

It's the market finally catching up with the organic growth & big speculative news we've seen over the last few months. Just look at google trends, the casino announcement in the US, wordpress etc.

 I disagree. This is not the market catching up. This is something else. Feels like a classic bubble brought on by irrationality.

 I hope I am wrong.

It feels to me like someone "knows something" and is accumulating in anticipation of some major announcement.. If I had to make a completely unsubstantiated guess.. I'd say some major online gambling site is going to start taking bitcoins soon, and the insiders are stocking up in anticipation of the major price spike they expect this will cause.

Sigg

Totally agree. Someone is trying to accumulate at a measured pace before a big announcement. Once the announcement comes there will be a big spike, and that will be the time for profit-takers to sell.

[Hawkix]

I guess that recent surge is due to increased popularity of Satoshi Dice between Bitcoin-vanilla gamblers.

[RodeoX]

I don't know why there is  surge, except for a lot of developments in the bitcoin economy. I do think that thew real rocket takes off when we beat the all time high price of about $32. At that point people may realize that there is no limit to the value of a bitcoin.

[cypherdoc]

There are lots of reasons why the price is high right now, it has nothing to do with ASIC's or mining in any way.

i disagree with this.

investors look to invest in something from many different angles.  some prefer to invest in the stock of a company, others prefer debt.  others prefer venture capital or the IPO.  debt investors might prefer senior secured debt, others junk debt.  all of it matters when analyzing the prospects for that company's success.

while the analogy might not be perfect, in the Bitcoin economy, there are legions of ppl who prefer to mine to obtain Bitcoins.  they may be more comfortable with the technical aspects vs. speculating on an exchange.  they may have a particular expertise which allows them to extract more block rewards than the avg miner.  they may have access to free electricity.  they may just enjoy it more.

what matters is that they are putting their money, time, effort, and expertise into the Bitcoin ecosystem, period. it just happens to be in the form of mining.  and that mining increases the network security and efficiency which speculators/investors like myself value very highly and thus invest accordingly.  mining (ASIC's) is worth at least as much as the speculators and the merchants to ensuring Bitcoin's success.

[CoinDiver]

Google Trends - "Bitcoin"

[creativex]

Google trends "get bitcoins"

http://www.google.com/trends/explore#q=%22get+bitcoins%22&cmpt=q



Roughly 80% of the peak interest and roughly 80% of the peak price(not adjusted for inflation), though on a much more sustainable trajectory this time.

[jwzguy]

Possibly related: the new Mega site has 2 service voucher resellers that accept Bitcoin.

One exclusively. That one is located in NZ, and is using a new Bitcoin payment processor that also just popped up...and is also in NZ.

[World]

investors look to invest in something from many different angles.  some prefer to invest in the stock of a company, others prefer debt.  others prefer venture capital or the IPO.  debt investors might prefer senior secured debt, others junk debt.  all of it matters when analyzing the prospects for that company's success.

while the analogy might not be perfect, in the Bitcoin economy, there are legions of ppl who prefer to mine to obtain Bitcoins.  they may be more comfortable with the technical aspects vs. speculating on an exchange.  they may have a particular expertise which allows them to extract more block rewards than the avg miner.  they may have access to free electricity.  they may just enjoy it more.

what matters is that they are putting their money, time, effort, and expertise into the Bitcoin ecosystem, period. it just happens to be in the form of mining.  and that mining increases the network security and efficiency which speculators/investors like myself value very highly and thus invest accordingly.  mining (ASIC's) is worth at least as much as the speculators and the merchants to ensuring Bitcoin's success.

I agree OP^

[World]

Possibly related: the new Mega site has 2 service vouchers that accept Bitcoin.

One exclusively. That one is located in NZ, and is using a new Bitcoin payment processor that also just popped up...and is also in NZ.

smart guy Brian Cartmell

[sublime5447]

#5 is ridiculous. You don't exactly kill bitcoin by buying up a large amount of bitcoin.. that just increases the value of everyone else's.

Sure you can kill (well not kill, it will live on at a much lower price) btc buy buying up a bunch. You buy a ton the price goes up you hold then off the market prices goes high and higher. Then you have a massive sell of. People buy into the hysteria, other sellers are no longer willing to sell they think they are going to get rich and say things like "we are all going to be weathy men" and the "price can only go up" and "there is always a bigger fool". So delusional IMO. Let SR shut down and see what it does to price.

I was selling 50-100 a day to my customers and when the price started shooting up I sold below spot. The reward should come from sharing BTC with the world not stashing it away like a troll. I stopped buying at 19, because I cant risk the volatility. I cant buy coins one day to have them devalue the next. If I were a seller on SR I would be looking for other options. It is great on the way up but, say you sold a lot and had all of your funds in BTC and while waiting for escrow to release of funds to transfer the bottom falls out, not a good position to be in. The speculation also punishes customers. The prices are not automated on SR So if sellers aren't changing the price every couple hours it inflates the price of their goods.

Treat it like money! Give it to the world. Stop being a bunch of greedy trolls. I promise the person/people that give it to the world are the ones who will windup rich. The person who gives the most number of people what they want will be the wealthy ones.

"It is not a good deal unless it is a good deal for everyone involved" 

[notme]

#5 is ridiculous. You don't exactly kill bitcoin by buying up a large amount of bitcoin.. that just increases the value of everyone else's.

Sure you can kill (well not kill, it will live on at a much lower price) btc buy buying up a bunch. You buy a ton the price goes up you hold then off the market prices goes high and higher. Then you have a massive sell of. People buy into the hysteria, other sellers are no longer willing to sell they think they are going to get rich and say things like "we are all going to be weathy men" and the "price can only go up" and "there is always a bigger fool". So delusional IMO. Let SR shut down and see what it does to price.

I was selling 50-100 a day to my customers and when the price started shooting up I sold below spot. The reward should come from sharing BTC with the world not stashing it away like a troll. I stopped buying at 19, because I cant risk the volatility. I cant buy coins one day to have them devalue the next. If I were a seller on SR I would be looking for other options. It is great on the way up but, say you sold a lot and had all of your funds in BTC and while waiting for escrow to release of funds to transfer the bottom falls out, not a good position to be in. The speculation also punishes customers. The prices are not automated on SR So if sellers aren't changing the price every couple hours it inflates the price of their goods.

Treat it like money! Give it to the world. Stop being a bunch of greedy trolls. I promise the person/people that give it to the world are the ones who will windup rich. The person who gives the most number of people what they want will be the wealthy ones.

"It is not a good deal unless it is a good deal for everyone involved" 

I've not used it, so I could be mistaken, but I was pretty sure I read that SR provides free escrow to sellers including an option to hold the funds in USD during the escrow period.  There are other options for hedging exchange rate as well.

[sublime5447]

I havnt used it either, but i will look into it. I would be nervous if I was a seller with large volume right now.

[abbyd]

OP here. This turned into a great thread - so much expertise here.

A few thoughts:
 casino announcement - plus a half mil venture investment
 deflation event - or an early inflation signal for USD...
ppl who prefer to mine - rather than ppl who prefer to whine?

it feels to me like someone "knows something"

It does make sense that ASIC makers would pump capital into the currency
 (at least short-term). Or somebody long OpenCL ARM implementations
... hrrmm ... tinfoil ....mutter

[3phase]

My #1 reason is Bernanke's QE which creates bubbles in any thing that can be inflated. In fact, add Draghi, Abe, newcomer Carney, and all the other central bankers. They're all in a race to debase their currencies.

So it's not Bitcoin going up in my view, it's the dollar going down, plus too much printed fiat, which fills bubbles with hot air. And I would also think that Bitcoin is one of the things that can inflate beyond any expectation as there is no physical anchor to it.

If money supply was tight, people would not risk shit in bitcoins, or anything else for that matter. And please don't tell me that people are hungry and deprived, watch the price of commodities, stocks, and supermarket goods. Everywhere. Are they going down because people don't buy them anymore? I guess not. QED.

Everybody likes to speculate and find the hidden meaning of the latest price rally, conspiracies, hidden business plans, you name it. I believe that part of it is because everybody knows it's a very risky business, and as humans we want to try to find a rationale for getting involved in such a thing. None of the things mentioned in this thread or all the others which I have managed to read could justify such volatility, even if one takes into account the "instant" movement of Bitcoin currency for speculation purposes.

So, I would suggest that you sit down and enjoy it while it lasts, and not expect it to last forever. If you can't take the thrills of risky ventures, better get a salaried job. If you can, dive in, surf the wave, and when you go down with it, take it like a man.

My 2 cents worth

[DobZombie]

I predicted this 4 months ago.  Its the reward halving catching up with the price!

Miners being as stubborn as they are refused to cash out and sell off their GPUs.
Move 2-3 months down the track when bills are coming in, they ask for a bigger payback when selling.  This has pushed it up over the next month. 

That's why the difficulty barely changed in this period. It went up 5%, dropped 10%, then increased 10%.

I'm pretty confidant that the price will panic drop either the weekend of Sat 16th Feb, or Sat 23rd Feb.  Once we get over the drop it'll recover pretty quick (2-4 weeks).

Bitcoin will stabilise at about $28-$32 until something big happens (BTC business going bust or Somebody big adopting BTC (Wordpress style).

[meanig]

Sure you can kill (well not kill, it will live on at a much lower price) btc buy buying up a bunch. You buy a ton the price goes up you hold then off the market prices goes high and higher. Then you have a massive sell of. People buy into the hysteria, other sellers are no longer willing to sell they think they are going to get rich and say things like "we are all going to be weathy men" and the "price can only go up" and "there is always a bigger fool". So delusional IMO. Let SR shut down and see what it does to price.

I was selling 50-100 a day to my customers and when the price started shooting up I sold below spot. The reward should come from sharing BTC with the world not stashing it away like a troll. I stopped buying at 19, because I cant risk the volatility. I cant buy coins one day to have them devalue the next. If I were a seller on SR I would be looking for other options. It is great on the way up but, say you sold a lot and had all of your funds in BTC and while waiting for escrow to release of funds to transfer the bottom falls out, not a good position to be in. The speculation also punishes customers. The prices are not automated on SR So if sellers aren't changing the price every couple hours it inflates the price of their goods.

Treat it like money! Give it to the world. Stop being a bunch of greedy trolls. I promise the person/people that give it to the world are the ones who will windup rich. The person who gives the most number of people what they want will be the wealthy ones.

"It is not a good deal unless it is a good deal for everyone involved" 

For a small fee SR vendors can hedge their currency risk while in escrow and the BTC/USD rate is updated at least twice per day.

The buyers and vendors have become wise to the price volatility. They've come up with appropriate strategies for doing business. From what I can tell on the forums the price swings aren't stopping any commerce from happening. 

[sublime5447]

Oh I see that is great it would be even better if it wasnt necessary. I wonder if there would be limits to the protection. For instance if it fell from 31 to 2 would you still be protected? That is pretty clever way to solve the problem. I wondered why some say hedged.

[abbyd]

From what I can tell on the forums the price swings aren't stopping any commerce from happening. 

BTC Uptrends wouldn't slow commerce that usually happens in USD - but downtrends could. I'd like to see a correlation...

BTC transactions are faster and easier online than most other options - this is what is driving the commerce.

[Melbustus]

There are lots of reasons why the price is high right now, it has nothing to do with ASIC's or mining in any way.

i disagree with this.

investors look to invest in something from many different angles.  some prefer to invest in the stock of a company, others prefer debt.  others prefer venture capital or the IPO.  debt investors might prefer senior secured debt, others junk debt.  all of it matters when analyzing the prospects for that company's success.

while the analogy might not be perfect, in the Bitcoin economy, there are legions of ppl who prefer to mine to obtain Bitcoins.  they may be more comfortable with the technical aspects vs. speculating on an exchange.  they may have a particular expertise which allows them to extract more block rewards than the avg miner.  they may have access to free electricity.  they may just enjoy it more.

what matters is that they are putting their money, time, effort, and expertise into the Bitcoin ecosystem, period. it just happens to be in the form of mining.  and that mining increases the network security and efficiency which speculators/investors like myself value very highly and thus invest accordingly.  mining (ASIC's) is worth at least as much as the speculators and the merchants to ensuring Bitcoin's success.

I'm on-board with this line of thinking. I just sent an email to a friend essentially arguing this point, noting that the hashrate jumping an order of magnitude is a huge "fundamentals" win for bitcoin. That said, I don't see a linear cause and effect between hashrate and price increases, but they both essentially stem from and re-enforce strong fundamentals.