Two simple charts.

[usagi]

One:


Two:



Discuss.

[evoorhees]

We're probably a quarter of the way into the Institutional Investors stage.

Price histories don't match up, but that's meaningless.

[rpietila]

The first institutional investor just launched (the hedge fund in Malta). But it is ridiculously small, so it does not really qualify. I think we are in the middle to the right in the "smart money" phase. It is possible that we are nearing the takeoff, in the very left of your chart.

The bear trap will come when we crash from $300 to $120.

[chriswilmer]

The first institutional investor just launched (the hedge fund in Malta). But it is ridiculously small, so it does not really qualify. I think we are in the middle to the right in the "smart money" phase. It is possible that we are nearing the takeoff, in the very left of your chart.

The bear trap will come when we crash from $300 to $120.

+1

I think if you take the price chart and scale it by 1/20th in the vertical dimension (i.e., all the price rises are basically noise in the grander scheme of things), that would be appropriate and put us in the "smart money" phase.

[mccorvic]

Oh god, he has pictures! Pictures with lines!  Tell us prophet, from doth where do thee gather such infinite knowledge?!

[Ivica]

This is a conspiracy by people who wish to buy btc with low prices.

[Odalv]

If you wish to sell me bitcion at lower price then you are welcome. :-). Maybe you are right and you will buy at $20 or you are wrong and you will buy at $200.  Who knows ? :-)

[Piper67]

Oh god, he has pictures! Pictures with lines!  Tell us prophet, from doth where do thee gather such infinite knowledge?!

He's not telling. He wants us to "discuss" 

[Dargo]

Even if 2011 was the first sell-off, followed by the bear trap at $2, we have along ways to go yet. Not sure the institutional investor phase is as relevant for Bitcoin since it wasn't part of any official market to begin with. So we could be starting the mania phase now even though institutional investing has just barely begun. If we see the general public get involved in Bitcoin as an investment (without corresponding widespread use as a currency), with really high expectations for appreciation, that might be the sign we are nearing a major top. I remember reading an article by a trader who made bank when the internet bubble burst back in 2000, and one of the things that clued him in to the top was that his plumber was going on about some internet stock, saying how it was a lifetime investment he was going to pass on to his kids, etc. The problem at the time was that valuations had greatly outpaced the underlying development of internet commerce. Given the rapid appreciation of BTC price recently, it too may outpace underlying development and require a major correction. A lot depends on how fast the Bitcoin economy can grow, and be an instrument of commerce rather than mere speculation. 

[dancupid]

I've already gone through the 'despair' phase - you saying there's more despair to follow?
Please Jesus, no more despair.

[Dargo]

I've already gone through the 'despair' phase - you saying there's more despair to follow?
Please Jesus, no more despair.

Well, degree of despair is relative to degree of hope/joy or something like that. If we rally to 300, then pull back to 120, as suggested above, then 120 will seem like despair after 300, but still awesome relative to current price, and especially relative to the dip to 2. And I can assure you that long before we get to 300, there will be some pullbacks to get you down. One thing is certain - we will not simply stair step up to 300, or even 100 for that matter.

[Roger_Murdock]

Does the "hype cycle" chart still apply if the technology really is a "new paradigm"? I hope the fact that that was my first question is not a bad sign... 

[rpietila]

In 1999, there was a company in Finland doing some specialist software. About 50 employees and made healthy profit. The owners wanted to take it public. Because of the IT boom, the IPO was oversubscribed 50 times, the minimum was 200 shares and many paid for more. In the allocation everyone was given 25 shares. The company received 50,000 new owners.

Now, the adult population in Finland is 4.2 million and we know that women do not invest. So 2.4% of the adult male population (18-108 years) participated. This is a bubble.

When we have 50000 users of bitcoin in Finland, and everyone has invested a mere € 5000, the total investment is € 250 million. At these prices, it takes about € 1 million of new investment to move the price up $1. So Finland alone could warrant the price going to around $300.

And it is good to remember that Bitcoin is not a 50-employee software company.

And that Finland is not the world.

[navigator]

Why can't we be like Apple?



From http://steadfastfinances.com/blog/2009/10/24/some-tech-bubble-stocks-finally-breaking-even-after-a-10-year-wait/

Apple

The Apple that we see in 2009 isn’t the Apple that existed in 1999. Steve Jobs wasn’t in the picture, no one but Napster had made any significant headway on the MP3 front, and Wall Street really didn’t care all that much about Apple because everyone thought that Microsoft would take over the world.

However, I included Apple in this simple case study to show how well a stock can perform — regardless of stock market crashes and investment bubbles — when Wall Street believes a true growth story exists.

[Gabi]

This crash from 700 to 450 is not what i would like for bitcoin, so no, i hope we are not like apple 

[Dargo]

Why can't we be like Apple?



From http://steadfastfinances.com/blog/2009/10/24/some-tech-bubble-stocks-finally-breaking-even-after-a-10-year-wait/

Apple

The Apple that we see in 2009 isn’t the Apple that existed in 1999. Steve Jobs wasn’t in the picture, no one but Napster had made any significant headway on the MP3 front, and Wall Street really didn’t care all that much about Apple because everyone thought that Microsoft would take over the world.

However, I included Apple in this simple case study to show how well a stock can perform — regardless of stock market crashes and investment bubbles — when Wall Street believes a true growth story exists.

I take it you are comparing Bitcoin to the early stage of the Apple chart? Wall street did not just believe in the growth story - the story was backed up by accelerating earnings growth, and the recent fall in Apple is attributed to the idea (right or wrong) that the growth story is over for Apple. Similarly, we will need to see accelerated growth in the Bitcoin economy in order to sustain an Apple-like move. I like the chances of this, which is why I'm holding long-term.

[oakpacific]

In 1999, there was a company in Finland doing some specialist software. About 50 employees and made healthy profit. The owners wanted to take it public. Because of the IT boom, the IPO was oversubscribed 50 times, the minimum was 200 shares and many paid for more. In the allocation everyone was given 25 shares. The company received 50,000 new owners.

Now, the adult population in Finland is 4.2 million and we know that women do not invest. So 2.4% of the adult male population (18-108 years) participated. This is a bubble.

When we have 50000 users of bitcoin in Finland, and everyone has invested a mere € 5000, the total investment is € 250 million. At these prices, it takes about € 1 million of new investment to move the price up $1. So Finland alone could warrant the price going to around $300.

And it is good to remember that Bitcoin is not a 50-employee software company.

And that Finland is not the world.

I think most people's greatest fear is the governments/established organizations' retaliation.

[usagi]

Does the "hype cycle" chart still apply if the technology really is a "new paradigm"? I hope the fact that that was my first question is not a bad sign...  

This is the response I was looking for. My point here is that markets are participated in by people. You are investing fiat money in an asset. Mass market psychology applies here. There is no new paradigm. People who say "new paradigm" will be caught in the mania phase with their pants down and their fingers wrapped firmly around their bitcoins -- unwilling to sell at any price.

Take a look at the AAPL chart posted in this thread. It matches the hype cycle chart even better than bitcoin does. That person's wish "why can't we be more like AAPL" is a dangerous wish indeed

[Bitcopia]

Oh god, he has pictures! Pictures with lines!  Tell us prophet, from doth where do thee gather such infinite knowledge?!

This made me lol.  Although the recent growth of the past couple weeks has been erie, but it's hard to pinpoint what's behind it because, as far as I'm aware, there is no precedent for such a unique market.

[oakpacific]

Does the "hype cycle" chart still apply if the technology really is a "new paradigm"? I hope the fact that that was my first question is not a bad sign...  

This is the response I was looking for. My point here is that markets are participated in by people. You are investing fiat money in an asset. Mass market psychology applies here. There is no new paradigm. People who say "new paradigm" will be caught in the mania phase with their pants down and their fingers wrapped firmly around their bitcoins -- unwilling to sell at any price.

Take a look at the AAPL chart posted in this thread. It matches the hype cycle chart even better than bitcoin does. That person's wish "why can't we be more like AAPL" is a dangerous wish indeed

Well, great, everything will fail, only fiats are so precious and invulnerable, fantastic.