What is going on? My prediction.

[alcibiades]

I believe that the Bitcoin ecosystem is growing exponentially. The news from Bitpay is a sign of this. They did $5 million worth of business last month - more than Silk Road. That could be $30 -$50 million by the end of the year. Tip bots on reddit, twitter, facebook, and email allow bitcoin to spread virally and fill the role it was meant for - the currency of the Internet.

But the price of Bitcoin is growing at a faster exponential. Part of this is pricing in the future exponential growth of Bitcoin. Part of it is speculation.

I predict that the price of Bitcoin is going to do a series of jagged swings over the next two years driven by speculation and hype bubbles and busts. But on a longer time scale, the swings will be centered on the true exponential of the Bitcoin economy.

So every now and then, people will get excited about bitcoin and bid it up to the ceiling of reasonableness. And then it will crash down below its true value. But if you watch the 6 month moving average it will be pure exponential up until market saturation.

The only thing that could stop this is the rise of a superior cryptocoin or widespread government persecution of cryptocurrencies.

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[bitcon]

sounds about right

[600watt]

i´d subscribe that. and more than that:

bitcoin is on a longterm hyper-auto-deflation.

1) if you compare the existing bitcoins with the existing goods/services that can be bought with it, that is only a small fraction of all goods/services currently available worldwide. every time another set of goods/services gets available bitcoin will deflate. we have seen "peak-bitcoin" already. this is just the beginning.

2) everyone that has ever owned btc in the4 past and used it to pay with it or cashed out realizes that he should have better kept it. it hurts to figure what "would have been, if i´ve just..." all these folks will hord their remaining, newly mined or newly bought btc in the future.

3) new people getting involved attracted by speculation. especially the rich and greedy can´t watch this bonanza forever without participating. it is tempting so much, thy cannot resist long, no matter what their investment advisors say. furthermore a lot of people with medium funds will try also to participate. and there are also a lot of people with small funds who want to end up at the sunny side once in their lives: they buy the dream, they buy only a few btc, but if millions of people do it it will also fuel the rocket. the fairy tale of one btc = one million fiat will become a self fullfilling prophecy.

4) new people getting involved attracted by the usefullness of btc, new people getting involved because they are fed up with the traditional banks.

5)  all other currencies are on auto-inflation

on the other side there is only a limited amount of btc. less and less can be mined, more and more get lost. exponential ? vertical !

[XXthetimeisnowXX]

I believe that the Bitcoin ecosystem is growing exponentially. The news from Bitpay is a sign of this. They did $5 million worth of business last month - more than Silk Road. That could be $30 -$50 million by the end of the year. Tip bots on reddit, twitter, facebook, and email allow bitcoin to spread virally and fill the role it was meant for - the currency of the Internet.

But the price of Bitcoin is growing at a faster exponential. Part of this is pricing in the future exponential growth of Bitcoin. Part of it is speculation.

I predict that the price of Bitcoin is going to do a series of jagged swings over the next two years driven by speculation and hype bubbles and busts. But on a longer time scale, the swings will be centered on the true exponential of the Bitcoin economy.

So every now and then, people will get excited about bitcoin and bid it up to the ceiling of reasonableness. And then it will crash down below its true value. But if you watch the 6 month moving average it will be pure exponential up until market saturation.

The only thing that could stop this is the rise of a superior cryptocoin or widespread government persecution of cryptocurrencies.

ya. exactly!

[Zangelbert Bingledack]

This is almost exactly what I see as well. To those that agree: remember, part of the nature of exponential is that continually takes everyone by surprise. It is very hard to eradicate the cognitive biases that cause this effect, even for those that recognize it.

[ehoffman]

I do have to agree that it's rising way too quickly (too much hype/speculation).  My guess is that when it break, it will break hard for many people.  Not to 1$...  Maybe still 2-digits.  As opposed to 2011, a lot more investors are in, so it probably won't be as sharp, but once people lose confidence in Bitcoins, it will gradually lower in value with ripples.

It's just plain silly how it grows now.  Of course, people want to move in, but I would probably see like 10% per months MAX as a reasonable growth in normal circomstances.  Since it started at around 20$, I say that now the fair value, in light of the recent events, would me more like 30~40$.  In fact, Cyprus should have only had minimal effect.

This make me think of the telecom and the dot-com bubble in 2000.  Remember how Yahoo! stock raised at that time (http://tinyurl.com/yahoo-bubble)?  Look at the sharp rising edge just before apogee...  This was all speculative on the "potential" revenue that the company could have in ads.