Will the bubble burst?

[BTCINVESTOR]

I'm not so sure the term "bubble" is a good one.

Since Bitcoin is so many things - currency, commodity, payment system, protocol, internet money -  you can't make direct comparisons with say; the real estate market or the gold and silver markets.

IMO Bitcoin has several of the qualities of an Internet startup company with new/revolutionary technology. And some startups just keep gaining value until they are multi-billion dollar companies...

The fact that valuation is rising fast does not necessarily imply that there is a bubble.

One of the best analyses presented on this so far.

If you think this is going to act anything like the stock market, think again. I have been investing actively in the stock and options markets for over 20 years. I have never seen anything like what Bitcoin is doing. The forces acting on it and the nature of how it is bought and sold are entirely different and totally astounding. Some serious players are getting down with Bitcoin right now. I am constantly talking the back channels. The big money managers are going to be taking over the place soon, and that's when you will see the serious money. It's chump change right now.

Maybe it's just we have got a lot of working class miners out there that are not really experienced in finance. Not sure. But it seems to me that the market has been owned by amateurs up until now. These price multiples you are seeing are like raw ribeye in front of Lions. I'm lecturing some investors this month, with millions of dollars mobilized and they are ready to dump out of USD pegged plays. They want me to show them how it works and how to buy in. And I'm just one solitary fella. Every one I have told about the bitcoin market has pretty much gone bananas.

We are seeing an evolutionary progression from a nerd-owned system (no offense, im quite a nerd too) to a pro-owned and "everyman" owned system.

I highly exhort you to think about Bitcoin differently than what you may already think you know. It's not a stock. It's not a bond. It is entirely new and different, drastically different than anything that has come before.

 

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[Kato]

The question clearly presupposes a bubble but we should not jump to this conclusion on the basis of a rapid price change alone. A bubble is when prices cannot be supported by fundamentals. The ultimate question is what is the fundamental value of Bitcoins? This will depend ultimately on what share of global transactions are made with Bitcoins. I don't know the answer to that, but as long as the integrity of the currency proves itself (still an "if"), its market potential could be much greater. Having said that, when there is panic momentum buying of Bitcoins, without regard to fundamentals, it is very reasonable to see the latecomers panic out again should prices begin to fall, exacerbating a decline. So regardless, Bitcoins are likely to continue to experience huge volatility, and a sensible approach would be fade intense episodes of buying or selling in the market.

[nobbynobbynoob]

While BTCINVESTOR is absolutely right that bitcoin is not stock, the way the market plays out with periods of panic buying and selling could still apply. I'm as much as, or almost as much as a bull as BTCINVESTOR but I know the bears will come out to play from time to time. This is not something to be feared, it is an opportunity to be revered.

Bitcoin.

[Gator-hex]

We're still in the smart money phase of your chart.  Talk of a bubble this early on is absurd.

Smart money was 2010/2011

[Manticore]

While BTCINVESTOR is absolutely right that bitcoin is not stock, the way the market plays out with periods of panic buying and selling could still apply. I'm as much as, or almost as much as a bull as BTCINVESTOR but I know the bears will come out to play from time to time. This is not something to be feared, it is an opportunity to be revered.

Bitcoin.

Exactly. One can't stay parabolic forever. At some point, there will be a correction (very normal).....but IMO there is more room to run for the time being ($150+). A lot of the new money coming into this.....Probably a mix of hot-money (with little tech savvy) and perhaps high-risk fund money, as others have insinuated. In the fund management world, I assure you that only very high-risk money (small %'s of VC type funds) will be flowing into this......your typical hedge fund will not be investing in this in the near future. I seriously doubt event-driven funds even know what BTC is, and 95% of private equity is way way too conservative to invest directly into BTC. VCs will be much more interested in investing in start-ups associated with BTC. And we are farther from BTC as an 'everyman system' than everyone is thinking.

Sorry for the double-negative, but there can't not be over-exuberance with BTC. The potential is too big for people not to get too too excited in the short-term. This rise, which will likely continue, will end up pricing perfection. Nothing is perfect or guaranteed. But hey, If the network effect can give FB a $100B market cap, perhaps the network effect can give BTC something similar......I am a believer, but a realist in that nothing goes up forever and some point we will get way way over-extended (where, who knows?). That's just the nature of the game.....

[Manticore]

And as far as professional money getting involved in this, I would be looking for lone day traders at Goldman Sachs et. al. to be getting involved in speculation before large funds pour money into this market. The funds are savvy and realize that the market cap of BTC could not handle large capital inflows.....they are smart money, and doubtful they would want to ride a wave of speculation without getting in at the bottom floor.

VCs have meetings all the time regarding new technology. That does not mean that directly after the meeting, they will pour huge $$ directly into BTC. These meetings serve to enlighten them on the technology so they can invest in other BTC start-ups. There are some smaller shops that shoot for the moon who may get interested, but you will not have groups like Sequoia Capital investing directly into BTC. They would be investing in a BTC start-up......

[deyer]

Max Keiser believes in a $100k BTC soon

Exponential growth in value! Get in while you can! Aaagh - 20% increase while I was waiting for the wire transfer to arrive!
Heard it before? Sure you have. So - will the bubble burst? Or is bitcoin just different? The exeption from the rule? The only true God this time?

[Gator-hex]

Max Keiser believes in a $100k BTC soon

He also said "$500 silver if you want it" it got to $50

[Tehfiend]

I wonder if one factor with the current bubble is the difficulty in cashing out because of withdraw limits at exchanges. There are still a lot of early adopters/investors sitting on a ton of coins that are very difficult to actually sell. For example, MTGox has a $10,000 USD monthly withdraw limit. If you wanted to sell $1million USD worth of bitcoins it would take 8 years to withdraw it. I'm thinking this could be preventing a sell-off and once those limitations are removed, I expect a major correction. I honestly wouldn't be surprised to see it hit $15/BTC at some point once these sorts of restrictions are removed. Right now I suspect many are only selling as much BTC as they can withdraw which artificially limits the supply since I suspect there might be a lot of people dying to sell right now.

/$0.02

[sub0]

There is a way of increasing the withdrawal limit on MtGox. You have to go through another round of verification in order to raise your account status from verified to trusted.

[zeocrash]

This is no bubble!!!!
Based on this exponential growth pattern i predict the following

June price $375 per BTC
September 1875 per BTC
December $9375 per BTC
by 2020 1 BTC will be worth $6.9849193e+22 or approx 10 billion times earth's current GDP.

Keep buying people

 

[Tehfiend]

Do you know what the max withdraw for trusted accounts is?

[myhoho]

yes, the bubble will burst soon. The Ben Bernanke's bubble...

[toomsie]

Or a hacker could create separate branch node thingy and create his own version of bitcoins from it

Unlike other markets, I am not scared of a bears or spooked speculators. If the price goes down to 1 usd per BTC
I will simply buy more of them, unless there is a new reason why BTC cannot be used as an online currency.

[koobie]

Bubbles are not unique to the stock market.  Look up the Tulip bubble.

[Neupleu]

I think it will slow down on weekend befor it gets to the final 100$ in march 

[didddyyy]

Some pretty interesting responses.

Measuring the volatility for the next couple of years will be fascinating.

[slakeco]

With the current supply and demand factors at play, specifically the last couple weeks moving into the next couple weeks,  (new interest, speculation players, European Economics and of course, Avalon ASIC Batch #3) cannot be ignored when guesstimating what the short term value of BTC will be.

It's fascinating the consider (IMHO) that $100/btc by 03/31/13 seems realistic and even probable.

[gooryheta]

This is no bubble!!!!
Based on this exponential growth pattern i predict the following

June price $375 per BTC
September 1875 per BTC
December $9375 per BTC
by 2020 1 BTC will be worth $6.9849193e+22 or approx 10 billion times earth's current GDP.

Keep buying people

 

Thats why I dont buy bitcoins now, you know someone has to pay this bubble.

[dendory]

Isn't the value of something always depending on offer and demand? Right now there is a lot more offer than demand which is a problem, and could lead to a crash. If everyone realizes that they have huge piles of coins and no way to transfer them to goods or other currencies, that could drive the price down. The way to ensure BTC's future is to see many more companies start accepting payment in BTC.