Bitcoin is no longer an investment vehicle, which I find to be all right. If you call it money then it can't really be used as an investment. [ ... ] now is the way it should be. Current BTC price easiliy supports current BTC transaction volume, no fundamental reason for it to grow. Merchant adoption will lead to sell pressure and can be good for the price only in the long run.
If we had no speculation, only demand for e-payments, the price would follow the equation P = V * T / N, where P is the price ($/BTC), V is the volume of e-payments ($/day), T is the mean time between successive payments with the same coin (days), and N is the number of currency units in circulation (BTC).
Assuming N = 14 million, guessing T = 14 days, and V = 5 million $/day, gives P = 5.00 $/BTC only.
The guess T = 14 days assumes that most coins that someone receives in payment for something, or buys to spend, are sold or used to pay for things at various times within one month. (BitPay sells all the coins that they receive within a day or two, for example.)
The guess V = 5 million $/day is based on various bits of evidence that indicate that BitPay has been handling about 1 million $/day of payments over the last year. Since they are believed to be the largest bitcoin payment processor by volume, a factor of 5 seems to be a fair guess for the total volume of e-payments. This estimate includes other processors and raw bitcoin payments, but excludes illegal trade, since that is being curtailed and cannot be relied upon as a sustainer of the price. (Anyway, it seems unlikely to be more than 1 million $/day).
It is not correct to use for V the total USD transaction volume extracted from the blockchain, because most of the latter (probably more than 90%) is movement of coins between wallets that belong to the same person, or that is not payment for goods or services -- such as tumbling, hot/cold wallet flow, deposits and withdrawals at exchanges and similar sites, gambling, etc.
Clearly, the current price (~220 $/BT) is still largely sustained by speculation and speculative holding.
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