Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[toknormal]

Why would someone buy USD when BTC is ubiquitously used in the future, because they want their currency to depreciate to gain stability?  That makes no sense

It does make sense. They would buy USD because they need it to faciliate trade of goods and services which are denominated in that currency. It doesn't depreciate fast enough to inhibit its use for trade. Any longer term holdings are invested so they don't lose value. Thats just how the world works - look back in history of 100 years. The $USD has depreciated massively - about 98% or something, yet it didn't inhibit the most monumental period of growth the world has seen in its existence.

It's right that fiat currencies should depreciate in value over time because their primary purpose is to facilitate trade and keep prices stable, not to store value (in the long term that is, obviously they need to be stable enough to store value in the short term).

Bitcoin will be stable (non-volatile) enough for commerce.

It won't be. It's academic. No fixed supply currency can be unless you have an economy that doesn't expand or contract in size. Also, if it was stable it wouldnt be doing its job. Many commentators criticise bitcoin for its volatility but it's that very volatility which indicates that it's successfully reflecting the balance of supply and demand for liquidity.

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[adamstgBit]

Why would someone buy USD when BTC is ubiquitously used in the future, because they want their currency to depreciate to gain stability?  That makes no sense

It does make sense. They would buy USD because they need it to faciliate trade of goods and services which are denominated in that currency. It doesn't depreciate fast enough to inhibit its use for trade. Any longer term holdings are invested so they don't lose value. Thats just how the world works - look back in history of 100 years. The $USD has depreciated massively - about 98% or something, yet it didn't inhibit the most monumental period of growth the world has seen in its existence.

It's right that fiat currencies should depreciate in value over time because they're primary purpose is to facilitate trade and keep prices stable, not to store value (in the long term that is, obviously they need to be stable enough to store value in the short term).

Bitcoin will be stable (non-volatile) enough for commerce.

It won't be. It's academic. No fixed supply currency can be unless you have an economy that doesn't expand or contract in size. Also, if it was stable it wouldnt be doing its job. Many commentators criticise bitcoin for its volatility but it's that very volatility which indicates that it's successfully reflecting the balance of supply and demand.

you are assuming the BTC's value reflects Supply Vs Demand, and there for if the economy expands or contarts the value of each BTC MUST change too.
this is false.
because bitcoin reflects Supply Vs Demand Vs Speculation
right now speculation is driving prices higher
later Speculation will keep price stable  as everyone Speculates that the value will remain stable.
speculators will PRICE IN the world's economic ups and downs.


its actually quite easy to achieve and it will happen naturally.

here's a graph that will illustrate how  Supply Vs Demand Vs Speculation will mean very stable prices in the future.



the red is the value of a BTC considering supply vs deamnd
the orange is the value of a BTC considering supply vs demand vs speculation

[Ted E. Bare]

Judging by the amount of generic spam accounts the bears got trapped once again. Love it.

[podyx]

Judging by the amount of generic spam accounts the bears got trapped once again. Love it.

Heres to bears getting trapped

[savetherainforest]

LOL! ... nice! Good thing there are fast moderators here! ... What an amazing spam! ...\

-----------------------

695$ - BitStam/Finex

Y4630/705$ - Huobi

$700+ soon!

[toknormal]

you are assuming the BTC's value reflects Supply Vs Demand, and there for if the economy expands or contarts the value of each BTC MUST change too.
this is false

Well, I was really describing a hypothetical situation where something like bitcoin was the main trading currency in an economy. In that situation bitcoin wouldn't have a price because there would not be a dollar with which to price it.

Lets say the size of the economy is "GDP" Bitcoin turnover per year. In other words, every year an amount of goods and services to the value of GDP (measured in BTC) is exchanged.

For a given monetary velocity (the GDP divided by the coin supply, or how many times the entire coin supply circulates on average), the relationship between prices of goods and GDP is linear. That means if the economy grows by 10%, prices have to decrease by 10%. If it contracts by 10%, prices have to increase by 10%.

This cannot work - for the reason I outlined in a previous post. Business go bust due to manufacturing cycles not coming in on budget and all sorts of unpredictability which is why the fiat system works as it does. It gets round this problem by creating new liquidity as it's needed and extinguishing old liquidity as economic expansion catches up with monetary inflation.

Even if this were not to happen (through the banking / credit creation system), the free market would just find a way to do it itself via the creation of hedging derivatives (and in fact already does in the case of international trade).

Thats why I'm saying that there'll always be these two parallel and complimentary dimensions to the monetary system and that will still be the case even if bitcoin becomes a mainstream asset.

[adamstgBit]

you are assuming the BTC's value reflects Supply Vs Demand, and there for if the economy expands or contarts the value of each BTC MUST change too.
this is false

Well, I was really describing a hypothetical situation where something like bitcoin was the main trading currency in an economy. In that situation bitcoin wouldn't have a price because there would not be a dollar with which to price it.

Lets say the size of the economy is "GDP" Bitcoin turnover per year. In other words, every year an amount of goods and services to the value of GDP (measured in BTC) is exchanged.

For a given monetary velocity (the GDP divided by the coin supply, or how many times the entire coin supply circulates on average), the relationship between prices of goods and GDP is linear. That means if the economy grows by 10%, prices have to decrease by 10%. If it contracts by 10%, prices have to increase by 10%.

This cannot work - for the reason I outlined in a previous post. Business go bust due to manufacturing cycles not coming in on budget and all sorts of unpredictability which is why the fiat system works as it does. It gets round this problem by creating new liquidity as it's needed and extinguishing old liquidity as economic expansion catches up with monetary inflation.

Even if this were not to happen (through the banking / credit creation system), the free market would just find a way to do it itself via the creation of hedging derivatives (and in fact already does in the case of international trade).

Thats why I'm saying that there'll always be these two parallel and complimentary dimensions to the monetary system and that will still be the case even if bitcoin becomes a mainstream asset.

forget about how the BTC is priced at that point.

and realize that speculation will always account for ~50% of bitcoins value

and you then you can expect somthing like this for the value of bitcoin in a future when it is used as currency and the market has fully saturated.



the red is the value of a BTC considering supply vs deamnd
the orange is the value of a BTC considering supply vs demand vs speculation


how do you get price stability in austrian economics?
you let the free market be free.

how to you  get price stability in kanizymen economics?
you do QE1 QE2 QE3 and pray to whatever god you believe in

[DaRude]

BTC7k ask wall on whoboi @ 4650CNY  that's whats slowing the dragon, west is taking the wheel?

[toknormal]

forget about how the BTC is priced at that point.

and realize that speculation will always account for ~50% of bitcoins value

You can't separate "speculation" from any other sort of demand. Demand for monetary liquidity comes from all kinds of sources.

I'm just pointing out that a fixed supply commodity - whether it's electronic or physical - is no use as a trading currency in an advanced economy unless it has a huge derivatives layer pasted on top of it that accommodates stable prices.

Here's more granular example that might be easier to understand and doesn't involve central banks  

Lets say you're a U.S. manufacturing company that makes teddy bears for the European market. You expect to sell $5 Million worth of teddy bears in Europe in the next 6 months and so you budget your manufacturing costs and production schedule accordingly to come in on a 30% margin, 5% of which is net profit.

So you expect an income of $5M denominated in Euros over the next 6 months which means you've got massive exchange rate exposure which could leave you at a loss in 6 months time, even though you did everything right, came in on budget and met your sales targets.

To avoid that situation, you purchase a hedging derivative such as a currency swap or Euro put option to cover 4.4M Euros which is the euro equivalent of your anticipated income at the start of the budget period.

--- Now: Lets asses the situation at the start of trading ---

Without even selling anything, you've just expanded the money supply by a few percent in the derivatives layer (which is basically a higher order extension of a base money supply). That derivatives layer then develops a life of its own - even when you no longer have use for it as follows...

Lets say it's 5 months later and the exchange rate moved against you by 20%. Your put option is now worth 1 million (20% of $5 million) dollars but you only made $4 million in sales. So you will get more on the open market by selling your option than you will by exercising it. A whole new monetary layer therefore opens up that's potentially even bigger than the base layer but which has the same effect of expanding the money supply (or making bitcoin's supply 'unlimited').

Advanced economies have massively complex layered monetary systems. You can't just say bitcoin's going to take over and expect everything to be denominated in units of a deflationary asset. It's ludicrous and ain't gonna happen.

Bitcoin is a monetary asset like gold and is far more mobile than gold, so it will probably have a role in trade to a greater extent than gold did. But it's unlikely to ever actually be adopted as a mainstream trading currency denomination IMO.

[Coinnosaurus]

Judging by the amount of generic spam accounts the bears got trapped once again. Love it.

Heres to bears getting trapped

Not this time  

[600watt]

Seems quite often that when people encounter bitcoin for the first time, they think it sounds too good to be true, and they come up with a reason why it won't work.  A few years later, when they encounter it again, they are more likely to go for it.  That promises for the next bubble given the widespread media coverage in 2013  .  

I am still bearish for the very short term (next day or 2) though.

i read about bitcoin in a news magazine in feb/march 2011. no IT knowledge at all. i decided to invest $3000, price was around $10. boy, it was hard for me to find out how to set up an account @mtgox and how to wire money to japan. the money took ages to get there while price was rising every day. the day it arrived on my account was the day of the peak bubble. instead of buying 300 btc i could only get 120. i hesitated. price climbed like a rocket. so i bought 100 btc.

aaaaand… price stopped to climb. bubble popped. it went down for the rest of the year all the way down to $2. i had managed to lose $2800 on some japanese online scam. mtgox was hacked while the the price went down, i could´t access my btc. decided to throw my account details/password into the garbage and felt so ashamed that i told no one about it and forgot all about it for years.

it wasn´t until march 2013 when some customer walked into my store and talked about bitcoin. didn´t even rang a bell. when he mentioned mtgox i remembered this tokyo based online scam and told to him to shut up talking about this fuck-up. the customer insisted it wasn´t a scam. i googled it. he was right, mtgox was still around. price was around $68 WAIT…WHAT??  i felt even worse, having no memory whatsoever about account access.

the guy suggested to write to mtgox customer service. i did. fuckin 10 minutes later they granted me access to my account, 100 btc sitting there untouched for 2 years. i got hooked on bitcoin that moment.  

[adamstgBit]

unless it has a huge derivatives layer pasted on top of it that accommodates stable prices.

there you go now you got it.
this "huge derivatives layer" is a naturally occurring phenomena in currency markets.
the long term expectations smooth out the short term volatility.

right now the exact opposite is happening, long term expectations are creating MASSIVE volatility short term, but that will change.

yes i've pulled this theory out of my ass.. but i stand by it.

[toknormal]

yes i've pulled this theory out of my ass.. but i stand by it.

LoL !

I know what you're saying - as the marketcap increases the volatility gets less which is true in relative terms. However, the stakes just change as it gets bigger.

A 1% short term move in the gold market is considered huge volatility.

For me, short term target for bitcoin is monetary asset markets, not retail adoption. In other words if it could capture 5% of the gold market that would be a massive thing and not unrealistic either because Bitcoin can probably service that market far more efficiently than gold can. Thats what people should be thinking - forget B.S. about Amazon accepting bitcoin or anything. Thats not not going to happen and even if it did would make zip difference to the marketcap.

[rjclarke2000]

Seems quite often that when people encounter bitcoin for the first time, they think it sounds too good to be true, and they come up with a reason why it won't work.  A few years later, when they encounter it again, they are more likely to go for it.  That promises for the next bubble given the widespread media coverage in 2013  .  

I am still bearish for the very short term (next day or 2) though.

i read about bitcoin in a news magazine in feb/march 2011. no IT knowledge at all. i decided to invest $3000, price was around $10. boy, it was hard for me to find out how to set up an account @mtgox and how to wire money to japan. the money took ages to get there while price was rising every day. the day it arrived on my account was the day of the peak bubble. instead of buying 300 btc i could only get 120. i hesitated. price climbed like a rocket. so i bought 100 btc.

aaaaand… price stopped to climb. bubble popped. it went down for the rest of the year all the way down to $2. i had managed to lose $2800 on some japanese online scam. mtgox was hacked while the the price went down, i could´t access my btc. decided to throw my account details/password into the garbage and felt so ashamed that i told no one about it and forgot all about it for years.

it wasn´t until march 2013 when some customer walked into my store and talked about bitcoin. didn´t even rang a bell. when he mentioned mtgox i remembered this tokyo based online scam and told to him to shut up talking about this fuck-up. the customer insisted it wasn´t a scam. i googled it. he was right, mtgox was still around. price was around $68 WAIT…WHAT??  i felt even worse, having no memory whatsoever about account access.

the guy suggested to write to mtgox customer service. i did. fuckin 10 minutes later they granted me access to my account, 100 btc sitting there untouched for 2 years. i got hooked on bitcoin that moment.  

Holy shit, thank god you got back on gox!! I presume you moved them straight away!!!

[Its About Sharing]

I just can't see it NOT being a FIAT vacuum cleaner.

Don't worry, I don't think Bitcoin will ever be a "fiat vacum cleaner". Think of it this way....

There are 2 general types of "money" needed by advanced economies. 1 type that keeps prices stable (for trading) and one type that keeps the supply fixed (for store of value). The one that keeps prices stable is simply a way to denominate trades - it isn't actually "money" in the sense of being a bearer token like commodities, precious metals or cryptocurrencies. On many websites now you can even choose how to denominate your trade - Canadian Dollars, $USD, EUR, whatever.

Those trading currencies need to have a variable supply - like the USD. A fractional reserve system which inflates and contracts according to liquidity requirements. If you don't have that and use a fixed supply currency like Bitcoin for trading then half the businesses in the world will go bust and the other half will make supernormal profits which are not sustainable.

So I don't see bitcoin ever being used as a trading currency en masse. (You don't see prices ever being denominated in gold and neither did we when there was a gold standard). Bitcoin is a base asset which can be used to "back" trading currencies for example or facilitate the capitalisation of whatever markets, but I think prices will still continue to be denominated in prevailing regional currencies.

I should be clear as many have made the "vacuum cleaner" statement. What I am saying is that instead of having a savings account we will (at least) have "Bitcoin accounts". Sure, the money supply by governments will want to be contracted and expanded for reasons that both make sense and are sick. No argument that that will continue for a while, perhaps with different FIAT money though.

But me as a "working"   individual, I do NOT want to have my money sitting in government money as I don't trust it and don't like how it is being used and using us. I would much rather have it sitting in Bitcoin or something stable. Maybe we keep a few thousand in dollars for spending in a checking account (but maybe we don't as if BTC is accepted everywhere, why have anything in government money?)

I just think the numbers won't lie and that people, even if they are only losing a very small amount, say .1% of actual buying power per month, would not want to have their money in the regular bank and would much rather have it in a Bitcoin bank (under their immediate control or not) as it might sound better to them to gain .1% per month, rather than lose .1% per month.

Its about sharing

[JayJuanGee]

Seems quite often that when people encounter bitcoin for the first time, they think it sounds too good to be true, and they come up with a reason why it won't work.  A few years later, when they encounter it again, they are more likely to go for it.  That promises for the next bubble given the widespread media coverage in 2013  .  

I am still bearish for the very short term (next day or 2) though.

i read about bitcoin in a news magazine in feb/march 2011. no IT knowledge at all. i decided to invest $3000, price was around $10. boy, it was hard for me to find out how to set up an account @mtgox and how to wire money to japan. the money took ages to get there while price was rising every day. the day it arrived on my account was the day of the peak bubble. instead of buying 300 btc i could only get 120. i hesitated. price climbed like a rocket. so i bought 100 btc.

aaaaand… price stopped to climb. bubble popped. it went down for the rest of the year all the way down to $2. i had managed to lose $2800 on some japanese online scam. mtgox was hacked while the the price went down, i could´t access my btc. decided to throw my account details/password into the garbage and felt so ashamed that i told no one about it and forgot all about it for years.

it wasn´t until march 2013 when some customer walked into my store and talked about bitcoin. didn´t even rang a bell. when he mentioned mtgox i remembered this tokyo based online scam and told to him to shut up talking about this fuck-up. the customer insisted it wasn´t a scam. i googled it. he was right, mtgox was still around. price was around $68 WAIT…WHAT??  i felt even worse, having no memory whatsoever about account access.

the guy suggested to write to mtgox customer service. i did. fuckin 10 minutes later they granted me access to my account, 100 btc sitting there untouched for 2 years. i got hooked on bitcoin that moment.  

Personal stories can sometimes be instructive, and show some of our own inclinations towards rash conduct - of course we are human (to the extent that we are not bots... hahahaha)

O.k.... March 2013, you have 100BTC... what did you do with those BTC, and did you buy more or sell more or transfer BTC and/or create various new BTC accounts - whether on exchanges or personally held?

[JimboToronto]

Is that linear or log?  

[yefi]

The ETH pump is over. Go back to the altcoin forum.

I don't ever remember this guy in the alt forum, and I was posting on one of the most active threads during the major rise from 600k sat...

[rjclarke2000]

Seeing as though I have nothing clever to bring to the table I'll say this .......will we see $700 in the next 12 hours? I'm in the UK and its 20.43 here. Things usually get good just as I am off to bed.


I mean with Bitcoin price not in my bed.

[Spaceman_Spiff]

Seems quite often that when people encounter bitcoin for the first time, they think it sounds too good to be true, and they come up with a reason why it won't work.  A few years later, when they encounter it again, they are more likely to go for it.  That promises for the next bubble given the widespread media coverage in 2013  .  

I am still bearish for the very short term (next day or 2) though.

i read about bitcoin in a news magazine in feb/march 2011. no IT knowledge at all. i decided to invest $3000, price was around $10. boy, it was hard for me to find out how to set up an account @mtgox and how to wire money to japan. the money took ages to get there while price was rising every day. the day it arrived on my account was the day of the peak bubble. instead of buying 300 btc i could only get 120. i hesitated. price climbed like a rocket. so i bought 100 btc.

aaaaand… price stopped to climb. bubble popped. it went down for the rest of the year all the way down to $2. i had managed to lose $2800 on some japanese online scam. mtgox was hacked while the the price went down, i could´t access my btc. decided to throw my account details/password into the garbage and felt so ashamed that i told no one about it and forgot all about it for years.

it wasn´t until march 2013 when some customer walked into my store and talked about bitcoin. didn´t even rang a bell. when he mentioned mtgox i remembered this tokyo based online scam and told to him to shut up talking about this fuck-up. the customer insisted it wasn´t a scam. i googled it. he was right, mtgox was still around. price was around $68 WAIT…WHAT??  i felt even worse, having no memory whatsoever about account access.

the guy suggested to write to mtgox customer service. i did. fuckin 10 minutes later they granted me access to my account, 100 btc sitting there untouched for 2 years. i got hooked on bitcoin that moment.  

Nice story.
I heard about bitcoin when it was 30 cents on a gold blog.   I figured it would be amazing if it would work, but then I thought"people will create clones, thereby cancelling the scarcity".  I thought about throwing 100 bucks at it, but ended up not doing it.  the price chart looked bubbly, and it would probably not end up working anyway. Never look at any decent info or a whitepaper.  I watched this YouTube video of rawdog, THAT buffoon was my source.... I mean I can't even.....   Wish I had bought then, but of course you never know what might have happened (could have lost all on scam exchange or whatever)