The 2013 Cryptocurrency Bubble

[gtrslayer]

Looking to start using bitcoins...I hope it's not a fad that will fail. The concept seems to be solid.

[legend]

BTE seems to be getting popular?

[Fuyuki_Wataru]

Seems the bubble is falling apart... Hope it continues to rise though.

[silzero]

This thread predicted $131 Bitcoin prices a month ago. Some good analysis here: https://bitcointalk.org/index.php?topic=142008.40
Also see this graph:
http://blockchain.info/charts/my-wallet-n-users

Gives an idea about the popularity of Bitcoin.

[cr1776]

Hi,
Those are good points, I would also add that there has been a huge increase in press and awareness of BTC in the last month so you have more interest and more demand (because of that and the items you listed) which has increased the price.  A classic supply/demand curve where demand has increased while supply has not.   

There's three separate things going on.

1) The "natural" built-in deflationary economics of BTC (and possibly some of the other related virtual currencies) will tend - all things being equal - to drive its value up over time. The economics of such isn't really proven in practice, despite anything people will tell you.

2) BTC as fear index. Gold isn't "working" right now in terms of its value going up. There's a lot of fear in Europe (and possibly in developing markets, although I don't really know) of the traditional banking system, in light of recent happenings in Cyprus. In theory (again, we don't really know in practice) it is hard for governments to control / tax virtual currencies.

3) Greed. This is where the bubble stuff comes in. It is interesting to watch the open trades list on exchanges to see where the support levels are. BTC has a lot lower volume than, say, a big futures market, so there's inefficiencies built in, but you can still see where people are reluctant to pay more, or sell for less.

[uMMcQxCWELNzkt]

I am going to split my earnings, casual freelance work will be invested in coins and everything else will go towards physical assets. I am a little worrisome over the prices though, as a new guy I can see how loads of people in my position are looking to jump on the bandwagon and the more it rises the more people will hold onto their coins. I cant see myself trading the coins much either tbh, it is difficult for newbies to get hold of anything so I would always want some reserved.

On a side note, can anyone point me to some good resources for stats (graphs etc). At the moment I just have an Android app called 'Bitcoin paranoid' which tells me the current price relative to my favoured currency.

[springy]

I have a moderate investment in Bitcoin (certainly more moderate in dollars today, then a year ago!).  While I would love the current rapid growth to be organic and sustainable, my bat senses tell me otherwise.  That said, it's not strong enough for me to cash out!

Every day this week the dollar value of my investment has increased more than a weeks worth of pay over night, it's making it very difficult going into work in the morning!!

[kylelgk]

At a glance I thought this topic was "2013 Cryptocurrency Bible" and my response was "I need a copy of this now!!!"

haha awesome

[kylelgk]

This made me wish i bought a lot of alt coins for all of my savings before the "bubble".
We will have an interesting week ahead of us, gentlemen!

hindsight is always 20/20

[kylelgk]

Everywhere I see people saying Bitcoin will keep 'raising and raising'. Those two words applied to housing prices got the U.S. into just a little mess starting in 2007-2008.
Pure hysterical raise is actually bad for Bitcoin in the long run. If does indeed turn out to be a crash, the bar, in terms of public image and value, will be much higher to be accepted as a real alternative to traditional currencies. Not that Bitcoin or the users are worried about public image. You may be looking at another 5-6 years before Bitcoin sees another uptick.

As much as I want to Bitcoin to raise, can anyone offer some insightful notes on why Bitcoin's price is going up?

Thanks,
SZ

Agreed, this rapid growth is turning it INTO a bubble. I don't think it will pop completely, but it won't happen as fast as it seems to be. Many new investors seem to be looking to just make a strong return on their investment and turn it back into fiat. Their faith in bitcoin won't be as strong as those who understand it and have been there since the beginning. Big investors could manipulate the market at such low volume, the legal systems may come after it,  the mainstream media's political interests may not favor positive press for bitcoin --- their are many scenarios that could potentially drive investors into a panic. I'm all in for now, but I'll be watching closely.

[kylelgk]

BTE seems to be getting popular?

I'm diggin it, unaffected by gox issues, BTC are cheaper usually, quadrupled some of my BTC in LTC... better platform. Major downside is that chat box in the front page. It's like the forums retarded stepchild, but you can't help but read it because it's clearly manipulating the prices (especially of the alternates). I got out of LTC quickly cuz I didn't have the energy or manpower to stay on top of it all.

[kylelgk]

Hi,
Those are good points, I would also add that there has been a huge increase in press and awareness of BTC in the last month so you have more interest and more demand (because of that and the items you listed) which has increased the price.  A classic supply/demand curve where demand has increased while supply has not.   

There's three separate things going on.

1) The "natural" built-in deflationary economics of BTC (and possibly some of the other related virtual currencies) will tend - all things being equal - to drive its value up over time. The economics of such isn't really proven in practice, despite anything people will tell you.

2) BTC as fear index. Gold isn't "working" right now in terms of its value going up. There's a lot of fear in Europe (and possibly in developing markets, although I don't really know) of the traditional banking system, in light of recent happenings in Cyprus. In theory (again, we don't really know in practice) it is hard for governments to control / tax virtual currencies.

3) Greed. This is where the bubble stuff comes in. It is interesting to watch the open trades list on exchanges to see where the support levels are. BTC has a lot lower volume than, say, a big futures market, so there's inefficiencies built in, but you can still see where people are reluctant to pay more, or sell for less.

I feel like it is being proven in practice right now...

As long as BTC can stand against - the governments, banks and alternate currencies - who's interest don't allign with BTC,  than it's value should only increase due to limited supply

[wowfreaks22]

Makes me wonder who is throwing all this money around

[reactive4ce]

Makes me wonder who is throwing all this money around

People who understand how costly is sending money overseas. International bank wire transfers and Western Union is a joke.

[Pruden]

Well, to me the reported increase in Vircurex use, that allegedly crashed their server, is more proof of this bubble. It's just that people buy anything with a --C code with their highly valued Bitcoins, thinking "Bitcoin has made me rich the last three months, but what if I caught the very early opportunity I missed with it? Let's try TRC. Oh, look! It has gone up! Let's throw some bitcoins at the DVC market. It has not gained value in a week. That means I am the first who thinks of buying it! Gotta jump in before the others. Imagine what all these could be worth in a year time!"

[che]

Bubble or not... i think that question largely depends on if the people buying cryptocoins are investors or gamblers. Investors would keep the prices up. Gamblers play and try to make the market volatile for personal gains.

[jrlichtman]

Obviously not the only definition, but Ben Graham famously said that an investment happens when you make your money at the time of purchase, and a speculation (i.e. gamble) happens when you hope to make money on something after your purchase.

[nwbitcoin]

I have had an interest in this market since Feb 16 - my investment has grown x 10 in that time.  I feel as if Im in a bubble - however ....!

Imagine you were a gold nut and its 2003, you are seeing gold going up in price, and nothing is stopping it, its got to eventually, but its now 10 years later, and the bubble still hasn't popped - what makes you think its not 2003 for Bitcoin too?

We have a tiny handful of people on the exchanges.  How many visitors does MTGox have in a day?  500k people - from a worldwide audience?  That can grow by at least ten times before its about the same as the audience for a big online game - it needs to grow by 1000 before it starts having the influence of a social media giant.

The bubble really isn't here yet - we have a good 18 months more before the game starts getting serious!

I would love to just buy what I want to in bitcoins, and avoid the banks all together, but that can't happen yet - it will happen in a few years and that is when the price will start to stabilise.  If it doesn't, it will crash big time.

However, for now, just enjoy the ride!