what causes the price to drop?

[txoomy]

What causes the price to drop?

If many people sell at once the price will drop - is what I hear, but if people are selling, aren't people buying those same BTC?

[bennett616]

The price is flying up, i cant believe it haha.



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[idividebyzero]

selling increases supply which lowers the price, there is a finite amount of bitcoin so supply and demand seems to be the determining factor.

[txoomy]

selling increases supply which lowers the price, there is a finite amount of bitcoin so supply and demand seems to be the determining factor.

How can selling increase the supply, when it simply changes hands? The supply does not change.

[Insarov]

How can selling increase the supply, when it simply changes hands? The supply does not change.

Think of BTC being held as BTC that doesn't exist in the market.  The market only accounts for BTC up for sale, so there's a finite amount being sold at any given moment.  If more people sell, there's more BTC available to buy,  increasing supply within the market.

[jerkoff]

selling increases supply which lowers the price, there is a finite amount of bitcoin so supply and demand seems to be the determining factor.

How can selling increase the supply, when it simply changes hands? The supply does not change.

Go read a book on stock market basics or price economics, it's basic knowledge.

[txoomy]

How can selling increase the supply, when it simply changes hands? The supply does not change.

Think of BTC being held as BTC that doesn't exist in the market.  The market only accounts for BTC up for sale, so there's a finite amount being sold at any given moment.  If more people sell, there's more BTC available to buy,  increasing supply within the market.

When you say "the market" you mean Mt.Gox, etc? The less the exchanges have vs the amount in circulation means more in individual wallets?

What confuses me, is that even the btc in Mt.Gox are in wallets...

[NetcodePool]

I think a lot of it is being manipulated.    Oh well, ride the wave =)

[txoomy]

I think a lot of it is being manipulated.    Oh well, ride the wave =)

By who?

[Trongersoll]

Anything is only worth what the buyer is willing to pay for it. I you are a gold miner, you are bring new gold out of the ground. if a lot of new gold is introduced at once and the miners are determined to sell now because they need to eat, they will offer their gold for less than the other guy. If you look at the charts for Stock symbol GLD, you will see that the price of gold has dropped recently.

It is the Same with Bitcoins. they are only worth what someone is willing to pay for them. Whether or not you get your price is partly dependant on how much of a hurry you are in to sell them, and if someone else is willing to sell for less than you.

[holy_cow]

What causes the price to drop?

If many people sell at once the price will drop - is what I hear, but if people are selling, aren't people buying those same BTC?

If you look at Mt. Gox or VirCurEx then you will see there is a sell price and a buy price.  The sell price is what people will buy them FROM you.  The buy price is what it will cost FOR you to buy them.  There is a gap between these two numbers.

There is a limited number of coins at each price.  So if the minimum buy price is $200 and I buy all the coins that were priced at $200, the price will go up to $201 (or whatever the lowest buy price is).

If no one is buying at the $200 price, eventually someone will try to sell at a lower buy price.

[Foxpup]

Say there are two people who each want to buy a bitcoin, and one is willing to pay $220 and the other is only willing to pay $200, and you want to sell a bitcoin. Obviously, you'll sell it to the guy offering the highest price, so you sell it for $220. Now, the next person who wants to sell a bitcoin will only be able to get $200 for it, since the guy who bought yours for $220 isn't interested in buying another one. In this way, you selling your bitcoin has lowered the price from $220 to $200. Exactly the opposite happens when people want to buy. Obviously, it gets more complicated when there are many people all buying and selling bitcoins in different quantities for different prices, but it's the same basic principle.