I just don't get it.

[oakpacific]

Has anybody else thought about this question--for a crash to happen, you have to get people to panic, but why should people panic?

[piramida]

I can see some foolish investor taking his house mortgage or whatever and go all-in on btc at some price like $40. Such an idiot would definitely panic if the price goes down to $39, so it's only a matter of time before there's enough people with mental stop-losses set within 10% of the current price, who would cash out on the first significant dip in price.

So basically the longer the price steadily climbs up, the more there will be people who have risked and invested what they can't afford to lose, and they will panic, and I don't know, bring the price down to like $25!

[creativex]

I can see some foolish investor taking his house mortgage or whatever and go all-in on btc at some price like $40. Such an idiot would definitely panic if the price goes down to $39, so it's only a matter of time before there's enough people with mental stop-losses set within 10% of the current price, who would cash out on the first significant dip in price.

So basically the longer the price steadily climbs up, the more there will be people who have risked and invested what they can't afford to lose, and they will panic, and I don't know, bring the price down to like $25!

One can only hope. The exchange rate re-visits $25/BTC and I'm dumping other investments to get more coins.

[oakpacific]

I can see some foolish investor taking his house mortgage or whatever and go all-in on btc at some price like $40. Such an idiot would definitely panic if the price goes down to $39, so it's only a matter of time before there's enough people with mental stop-losses set within 10% of the current price, who would cash out on the first significant dip in price.

So basically the longer the price steadily climbs up, the more there will be people who have risked and invested what they can't afford to lose, and they will panic, and I don't know, bring the price down to like $25!

If that happened, I doubt if bitcoin would have totally gone mainstream already.

What I intend to say is this:Bulls have already profited massively from the current rally, and a bitcoin crash would by no means be a "flash crash", it's going to take days,  if not months, to fully pan out, there would be enough time for a bull to comfortably recoup his investment and make a handsome ,though not maximized profit, before reinvesting a part of his profits in bitcoin, if it's not a "spot the top or lose everything" scenario, why should they panic?

[Jutarul]

What are the factors at play here.. Help me make an informed decision.

demand>supply

also bitcoin gains gold and silver status in the mainstream

[jwzguy]

I mean this in the nicest way possible...please don't buy back in until you get it.

[molecular]

The way the exchange rate has increased is different as well. The rally has been actively cooled with fake ask walls on a number of occasions.

I don't quite recall '11 exactly enough (it just went too fast) but I think you are right... there was no activity to try to cool the rally.

[KTE]

So basically the longer the price steadily climbs up, the more there will be people who have risked and invested what they can't afford to lose, and they will panic, and I don't know, bring the price down to like $25!

However you don't take into account the fact that the people who invested when we were at $10 or $20 have a huge margin before they have any reason to worry as the price is at $35. So the danger of panicking isn't cumulative for each idiot.

[Piper67]

So basically the longer the price steadily climbs up, the more there will be people who have risked and invested what they can't afford to lose, and they will panic, and I don't know, bring the price down to like $25!

However you don't take into account the fact that the people who invested when we were at $10 or $20 have a huge margin before they have any reason to worry as the price is at $35. So the danger of panicking isn't cumulative for each idiot.

Pssst... guys... the ones who are investing what they can't afford to lose aren't the ones driving this rally. We'd be wise not to base our decisions on their mindset 

[blackreplica]

I am not sure we can conclusively say that every person buying now at this price are investing what they can't afford to lose

[aznmonky]

I am not sure we can conclusively say that every person buying now at this price are investing what they can't afford to lose

depends on the person really i think, also food for thought wouldn't any market that thrives on investors have a select group of fools who don't think several steps in every direction ahead? correct me if i am wrong but generally those who invest in bitcoin have a attitude and a set value in their mind their are willing to risk and accept the loss, ultimately it comes down to fear and how everyone reacts to losing the slightly amount or if they decide they can't handle the emotional ride

[RodeoX]

The price of a bitcoin is irrelevant. Even if bitcoin were $1000 each it would be a good investment if it rose to $1200. That's a 20% return!  It's never too late to get in on a rising price.

[piramida]

However you don't take into account the fact that the people who invested when we were at $10 or $20 have a huge margin before they have any reason to worry as the price is at $35.

Yes, but they can panic in advance, seeing the price approaching their buy-in level. Not sure that I agree with oak that flashcrash is not possible anymore - Gox is bigger that in 2011, but order book is still thin at only about 100k coins to go to $20, so it takes 2.5 million of profit taking for a significant dip. That's why high prices I think is important - price would be much more stable if we steadily grow to triple digits.

[oakpacific]

However you don't take into account the fact that the people who invested when we were at $10 or $20 have a huge margin before they have any reason to worry as the price is at $35.

Yes, but they can panic in advance, seeing the price approaching their buy-in level. Not sure that I agree with oak that flashcrash is not possible anymore - Gox is bigger that in 2011, but order book is still thin at only about 100k coins to go to $20, so it takes 2.5 million of profit taking for a significant dip.

The 2011 crash took about a month to plunge the price under $15, even let's just say, we now have 1/10 of that much time--3 days, would that not be enough for you? Not to say the early adopters did not care that much about at what price they cash out--they got the bitcoins for cents.

[byronbb]

The way the exchange rate has increased is different as well. The rally has been actively cooled with fake ask walls on a number of occasions.

I don't quite recall '11 exactly enough (it just went too fast) but I think you are right... there was no activity to try to cool the rally.

There was probably hardly any liquidity left on the exchange either.

[johnyj]

People always talk about how each bitcoin will worth after each one on the planet will own 1 of them, this is short sighted view in my opinion

Even everyone on the planet already get their hand on bitcoin, it is still early phase of the adoption. The well known limited supply nature make bitcoin a perfect target for saving without worrying about the lose of its value, it is more like a permanent promise about the trustworthiness, and it is backed by mathematics and network (more or less today's prevailing religion)

And the demand for saving is huge, because now we know that government can not hold their promise for repayment of pension due to various problems in the economy/financial crisis etc...

I foresee there will be a huge trend of private pension saving, and bitcoin definitely will become a very important part in that portfolio

[n8rwJeTt8TrrLKPa55eU]

If you want to understand the potential (or inevitable) adoption of Bitcoin, then look at the adoption of the internet. As the internet is a force of freedom of speech, so will Bitcoin be the force of freedom of exchange.

Given your statement (which i agree with), I think it's slightly amusing how the built-in coin generation rate curve looks a lot like the Internet adoption curve:



That's most likely a meaningless coincidence.  

However, the interesting point from the chart, is that if the adoption rate of both phenomena are similar, it would imply that most of the adoption (& price gains?) will occur approximately within 10 years, i.e. by 2020.  The X factor being that the existence of the Internet accelerates information dispersion and uptake by at least twofold, but on the negative side a brand new type of money has to deal with an entrenched legacy mentality and infrastructure that is tougher to convert.  So perhaps Bitcoin might only need 4 or 5 years to reach global awareness and adoption (similar to something like Facebook between 2008 to 2012), or it could take 20 years to fully overcome the inertia of existing moneys and payment systems.

[cypherdoc]

If you want to understand the potential (or inevitable) adoption of Bitcoin, then look at the adoption of the internet. As the internet is a force of freedom of speech, so will Bitcoin be the force of freedom of exchange.

Given your statement (which i agree with), I think it's slightly amusing how the built-in coin generation rate curve looks a lot like the Internet adoption curve:



That's most likely a meaningless coincidence.  

However, the interesting point from the chart, is that if the adoption rate of both phenomena are similar, it would imply that most of the adoption (& price gains?) will occur approximately within 10 years, i.e. by 2020.  The X factor being that the existence of the Internet accelerates information dispersion and uptake by at least twofold, but on the negative side a brand new type of money has to deal with an entrenched legacy mentality and infrastructure that is tougher to convert.  So perhaps Bitcoin might only need 4 or 5 years to reach global awareness and adoption (similar to something like Facebook between 2008 to 2012), or it could take 20 years to fully overcome the inertia of existing moneys and payment systems.

i'm much more interested in comparing Bitcoin asymptotic growth to this:

[blackreplica]

However you don't take into account the fact that the people who invested when we were at $10 or $20 have a huge margin before they have any reason to worry as the price is at $35.

Yes, but they can panic in advance, seeing the price approaching their buy-in level. Not sure that I agree with oak that flashcrash is not possible anymore - Gox is bigger that in 2011, but order book is still thin at only about 100k coins to go to $20, so it takes 2.5 million of profit taking for a significant dip. That's why high prices I think is important - price would be much more stable if we steadily grow to triple digits.

Can't argue with you there but there arent that many people who own 100K BTC. And those who do probably were pioneers who picked their coins up for next to nothing. Which, if i am guessing right, will not be too perturbed by sudden price swings as long as bitcoin remains fundamentally sound

As long as BTC performs, or has the potential to perform, the way people think it will. We don't have to worry about a crash of apocalyptical proportions (major price swings on the other hand...). But if one day something happens to end the bitcoin dream (like a major hack, or total global ban) then we all jump ship at the same time and no one will come out of it without losing close to everything they have

[ajk]

agreed with post above

i think to many big players are involved at this point and if one were to go down the market could handle it,

when coinlab opens i am excited to see how the market will react to quarter million dollar buys and sells