Anyone have fundamentals to support a higher value on BTC?

[Wuji]

Been watching BTC on a long position and watching things daily since it was last at $8.  I was happy on Mar 9th when BTC hit $50 as it was a steady climb and monitoring Silk Road usage not unexpected.  Stocks are always overvalued on P/E and I figured BTC was a bit overvalued but, this is not a bad thing as an investment.  As adoption and usage increases the price should continue to rise, I was a happy bull.

I saw BTC flat line around $50 for about 9 days until Mar. 17th and thought good things are levelling off and making sense, perfect!  If you go to Google news and search for Cyprus you'll see this is the day (Mar 17th) the Crisis was announced to the world.  In one week price jumped to $75.  Then two weeks later the price is over $100.  Today it hit $148 on MtGox and is at $118 as I write this.  I sold a chunk at $103 yesterday and this crazy fluctuation today means for me time to move another chunk based on past investment experience.  I believe the price over $50 is people who had money in Cyprus trying to get it out as fast as possible.  Also there is quite a bit of evidence that Spain is moving money to BTC.

http://www.wired.co.uk/news/archive/2013-03/20/bitcoin-spain-currency-run

So with all this evidence of speculation, I keep digging for evidence to back up the bulls.  Claims of $1000 or $10,000 and I'm can not find fundamentals to support this kind of rise.  In fact this huge surge based on so little and now crazy fluctuations looks identical to every speculation run I've ever seen (I prefer the term "Ramp-up then Cliff" to bubble).  Also the bulls accuse everyone of trying to discuss evidence of speculation as trying to drive prices down to buy more.  This reminds me of how a politician doing something will start yelling his opponents are doing the same thing to divert attention from their own actions.  Like how a cheater in a relationship accuses his/her partner of cheating.

So bulls, I ask, where are the fundamentals to support the above $50 price point for BTC?  Honestly I really would love evidence to support the price so I don't sell any more and can cash out $1000 or $1000000.  Start pointing me in the right direction, maybe I missed those informative posts at some point.  Oh and I know about BTC ATMs and Western Union but, those are maybes at this point, no decisions yet made, which is called speculation.

[dreem]

The total amount of fiat currency in circulation is some on the order of 10 trillion dollars (this changes over time so really one order of magnitude is all the accuracy needed for this estimation). Because there is a limit on how many bitcoins there will ever be of ~20 million, if bitcoin one day replaces fiat and has a similar market cap, each bitcoin would be valued at ~$500,000. It isn't really expected for bitcoin to become an entirely universal currency anytime soon, numbers like $10,000 or $100,000 show up.

[Wuji]

Before Fiat currency, money was based on Gold.  I believe that change happened in 1973 and dollars didn't rise at this rate before then.  Gold is a limited resource like BTC.  Why is BTC expected to rise soon to $1000 or $10000 when limit currencies have not behaved that way in the past?  A good article I found today on why these speculation based rises actually will more likely hurt Bitcoin as viable currency than help.  Bitcoin is going from currency to commodity it seems at the moment.  I'll be happier if it goes back to being more of a currency again.

http://blogs.reuters.com/felix-salmon/2013/04/03/why-bitcoins-rise-is-nothing-to-celebrate/

[FJBourne]

Thanks for that link wuji, interesting read

[jwzguy]

More people finding out that Bitcoin can protect their wealth against hyper-inflation and outright deposit theft is all the reason we need to support prices many orders of magnitude higher than now.

And more people are definitely finding that out - we've had mainstream press pieces flooding in over the last few weeks.

Other recent fun things:
Bitcoin ATM's being mass produced and ordered for 30 countries.
Malta-based Bitcoin hedge fund allowing big money in through a means non-tech people are comfortable with.
Bitpay doing 5 million in transactions in March.
BitcoinStore.com making enough sales to keep their contract for another quarter.
Expensify integrating Bitcoin.
Western Union announcing plans to integrate Bitcoin.
Thousands of new small businesses adding Bitcoin support.
Real estate companies accepting Bitcoin.

And most fun: Every family member and friend I've talked to about Bitcoin calling me in the last week. It only took a 5000% rise in value.  

Our little "experiment" is snowballing in a huge way, and people insisting it's "just a bubble" have no clue what's going on.

[Fjordbit]

I think today's jump is a bit much, but overall

- Bitcoin inflation cut from 25% to 12.5% in late November.
- Internet celebrity and million Kim Dot Com unequivocally endorses bitcoin.
- Gambling world on fire with bitcoin news from Satoshi Dice making $500k/month to large internet poker sites accepting bitcoin for funding/cashing out to even opening bitcoin tables.
- Spanish hedge fund announces they have $3m in bitcoin holdings and are seeking the ability to sell to Americans.
- FinCEN releases a statement legitimizing distributed virtual currencies.
- Euro troubles indicating hard times for the fiat currency in the future.
- Bitpay announces $5m in sales in one month. Bitcoinstore shows $500k for their first quarter 2/3rds of which they were in beta. Basically, there is strong evidence that you really can get sales and that the white market is eclipsing the black market.

Does it add up to a $1.5b market cap? Maybe not, but markets tend to be forward looking (meaning the price rises first and then the support comes after).

[Wuji]

"Bitcoin can protect their wealth against hyper-inflation"

I myself have long been concerned about eventual hyper-inflation however, that is not occurring with USD at the moment.  Nor do I know of any indicators that suggest it will happen in the near future.  The past two to three weeks I'd describe BTC as the currency hyper inflating.  In fact at this point I consider it an over price commodity and my link above will explains it in great detail if you go to the full article.

- I already included some of your fun things like Western Union and ATMs which is being considered but hasn't happened (Speculation).
- Many in mainstream think of Kim Dot Com as a criminal.  His greed and actions did cause him a lot of problems.  While he has had success his business methods differ from mine.  I'm more curious about those who see no risk in BTC.  Using a huge risk taker like him as an endorsement makes me think you must see the risk.

So far none of the points show me that BTC is going up based on its value as a currency.  Many new services may accept it but the volume before this run up does not indicate to me that this run up is not (above $50USD/BTC) speculation.  I counter the claim that those insisting this is a bubble don't know what is going on.  In return I say those claiming this is not a bubble do not understand that massive speculation always ends with disaster.  I'm sure I don't need to rehash all of the past run ups based on speculation we saw die.  Every since the 1990s I've made money shorting speculators.  It is a very simple method that makes a lot of money.

The adage buy low sell high has never once failed me.  Yet over and over again I watch the herd buying high and then selling low.

[jwzguy]

"Bitcoin can protect their wealth against hyper-inflation"

I myself have long been concerned about eventual hyper-inflation however, that is not occurring with USD at the moment.  Nor do I know of any indicators that suggest it will happen in the near future.  The past two to three weeks I'd describe BTC as the currency hyper inflating.  In fact at this point I consider it an over price commodity and my link above will explains it in great detail if you go to the full article.

- I already included some of your fun things like Western Union and ATMs which is being considered but hasn't happened (Speculation).
- Many in mainstream think of Kim Dot Com as a criminal.  His greed and actions did cause him a lot of problems.  While he has had success his business methods differ from mine.  I'm more curious about those who see no risk in BTC.  Using a huge risk taker like him as an endorsement makes me think you must see the risk.

So far none of the points show me that BTC is going up based on its value as a currency.  Many new services may accept it but the volume before this run up does not indicate to me that this run up is not (above $50USD/BTC) speculation.  I counter the claim that those insisting this is a bubble don't know what is going on.  In return I say those claiming this is not a bubble do not understand that massive speculation always ends with disaster.  I'm sure I don't need to rehash all of the past run ups based on speculation we saw die.  Every since the 1990s I've made money shorting speculators.  It is a very simple method that makes a lot of money.

USD is experiencing a dramatically increased rate of inflation. Google Tomato Soup Index.

Bitcoin ATM is absolutely happening. Not speculation. Keep up.

The wonderful thing about Bitcoin is that if you're too dense to understand the problems with your statements, you are the one that suffers. It's another reason Bitcoin is going to succeed. People who are in the right finally get rewarded.

Have fun sticking to the "it's a bubble" nonsense, I've been hearing it since the price went from $2 to $3. You guys don't understand what Bitcoin is.

[Kazu]

Yawn..wha?? Is fiat dead already? Not yet? Ok, guess Bitcoin will just have to keep going up then, wake me up when they run out of ink pls...zzzz

Sorry to get off topic, I'd just like to congratulate you on an epic choice for a sig...

[Wuji]

Food is not the only thing used to measure inflation (in fact I think it is factored out as unreliable) as the price of food is determine by an enormous number of variables, thanks globalization.  Even tomato soup prices over the last 50 years which I just checked out are no sign of hyper inflation.  Make your own real graph and place it on top of a BTC chart and tell me which one is inflating at a faster rate.  

[strikegold]

i do not have any fundamentals to support a higher value.

but looking into the future Bitcoin has IMO endless potential!

please watch this video:

http://youtu.be/mD4L7xDNCmA

Mike Hearn discusses "The future of Bitcoin: new applications and rebuilding the banking system"
at the London Bitcoin Conference 2012.

i have not bought any Bitcoin myself 

[Wuji]

"Bitcoin ATM is absolutely happening. Not speculation. Keep up."

Are you manufacturing them or is this something you read?  Can you post a link to show proof or is this just what the Jeff Berwick said?

Since I'm not keeping up perhaps you can enlighten me on how the regulations and licensing, government cooperation, functionality, exchange rates, social demand, fees, etc. are going to be handled?  At what date can I make a withdraw?

[Wuji]

Strikegold, Yes I believe in the future of BTC.  I started buying in at $8 and stopped at $14.  I'm very happy and have no regrets dumping 20% at $103.  I'm only trying to find more info on short term reasons for value increase vs. speculation.

[Wuji]

Since hyper-inflation and Fiat were brought up, here is another article which helps explain why I don't see any near term USD hyper-inflation coming:

http://www.businessinsider.com/treasuries-are-not-in-a-bubble-2013-4

[ewitte]

Probably just dropping value of fiat currencies   USD among them going to free fall soon.

[Kazu]

Since hyper-inflation and Fiat were brought up, here is another article which helps explain why I don't see any near term USD hyper-inflation coming:

http://www.businessinsider.com/treasuries-are-not-in-a-bubble-2013-4

Treasuries are not in a bubble (tons being printed every day) but BTC is (strictly controlled quantity by math). Yea, that makes sense.

[redguitar11]

Great link!

[ewitte]

Lots of places have already stopped accepting USD. 

[sunnankar]

So bulls, I ask, where are the fundamentals to support the above $50 price point for BTC?  Honestly I really would love evidence to support the price so I don't sell any more and can cash out $1000 or $1000000.

You may want to read this and consider this.

Another landscape changing fundamental are the FinCEN guidelines. This basically gives companies the green light to accept bitcoins and VCs the green light to innovate with Bitcoin so long as they follow particular rules. The dispelling of the pall of potential legal liabilities should not be underestimated.

Thus, Bitcoin is in a melt-up right now and the extremely illiquid market does not help the case of efficient price discovery. The bottom line is that tens or hundreds of millions of dollars want to come into this space and it is not large enough for that at current prices.

Remember, there are only two variables in the price function: transactional and speculative demand. Transactional demand is price agnostic and since prices are set at the margin this can go ballistic and likely is with all the free publicity Bitpay (March $5.2m versus previous monthly record of $700k) and Silk Road are receiving to stimulate the Bitcoin economy. Which leaves only speculative demand for determining the price. And Bitcoin holders can save them indefinitely. So the price melt-up could happen really fast.

So, who wants to be like the Litecoin trader with seller's remorse? One guy wrote a sad tale about how in January he bought 80,000 litecoins at $0.068 and sold them at $0.20. Litecoins are selling for about $5 today. So he took a 194% return, or $10,560, but missed out on a 7,250% return, or $394,560. and is feeling seller's remorse.

So likewise we could pretty easily see a similar melt-up in the Bitcoin price to $1,000 by the end of summer. Which VC is going to fire the first shot in the Mexican standoff?

[move_zig]

USD is experiencing a dramatically increased rate of inflation. Google Tomato Soup Index.

I like the idea of indexes like this. But for people not trying to be alarmist, showing a logarithmic chart would work better.

This shows that the recent trend is higher than average, without resorting to hyperbole--just the facts: