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

[notme]

I like to hope that the bears in this kind of market sustain enough losses that their power to irrationally drive it down is greatly diluted. I suppose corrections are natural, but it's nice to have a collective sense of confidence when the smart ones know it's going up no matter the short-term obstacles. I guess the new money have to get their coins from someone.

Bears will be burned, but remember that they are the only thing keeping this from overshooting too far to the upside.  When we overshoot, we correct much harder and then the bears have a field day (or month, or year).

[ardana123]

so when are the news outlets going to start picking this up
we need some new blood coming in

[prophetx]

I like to hope that the bears in this kind of market sustain enough losses that their power to irrationally drive it down is greatly diluted. I suppose corrections are natural, but it's nice to have a collective sense of confidence when the smart ones know it's going up no matter the short-term obstacles. I guess the new money have to get their coins from someone.

unfortunately what is happening right now is price going up due to lack of supply due to hoarding, not any new magnitudinal shift in utility that has come online with btc business in the last 3 weeks. look at the tx graph it has not shifted since last year.

people who got paid in btc a few years ago are sitting on thousands, some of them are not providing any value to the system especially by not circulating the btc they have.  they could easily take those coins and invest them into btc businesses or people to write off their massive profits but instead they are hoarding for various reasons (I realize some people didnt declare this income the first couple years and are in a weird position...).  that is not healthy.

i don't recall who it was but one of the dev's once said that there would be something like 5 (or 7?) btc bubbles.  market adoption driven bubbles should happen in the first 2 and 3 stage (mass market adoption, final bubble) of market adoption. there is probably some academic studies i have read on this but i dont recall offhand

my personal opinion is that bubbles should be spaced out longer than the time period between the last 2 bubbles as it takes longer for new innovations to bring about new growth curves.  the time period between the last 2 bubbles was about 21 months.  it is been only 6 months and people are already expecting another bubble event...  

[Le Happy Merchant]

my personal opinion is that bubbles should be spaced out longer than the time period between the last 2 bubbles as it takes longer for new innovations to bring about new growth curves.  the time period between the last 2 bubbles was about 21 months.  it is been only 6 months and people are already expecting another bubble event...  

But so much has changed.

[adamstgBit]

 

ty;dr;

say bye bye to 200 

[Richy_T]

unfortunately what is happening right now is price going up due to lack of supply due to hoarding, not any new magnitudinal shift in utility that has come online with btc business in the last 3 weeks. look at the tx graph it has not shifted since last year.

If people are hoarding, it is because they believe that the value is higher than the current trading price, no?

[prophetx]

my personal opinion is that bubbles should be spaced out longer than the time period between the last 2 bubbles as it takes longer for new innovations to bring about new growth curves.  the time period between the last 2 bubbles was about 21 months.  it is been only 6 months and people are already expecting another bubble event...  

But so much has changed.

look at this tx graph  https://blockchain.info/charts/n-transactions?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=

the # of processed tx is a proxy for utility, earlier this year we got rid of dust tx and you could see the decrease, and now an increase which means that some new value has been brought in but we are not talking 10X yet. in the last bubble the magnitudinal (10x) tx increase preceded the massive (10x) price range shift

[Zangelbert Bingledack]

I think it's a myth that Bitcoin's value mostly stems from transaction value or merchant adoption. The real driving force is long-term investment. Or rather, the value does stem from transaction value and merchant adoption, but not present transaction value or merchant adoption but future transaction value and merchant adoption. One of the things that investors do is drive up the price of things that will serve a valuable function in the future, since most people won't buy them now since they're not valuable for that purpose now.

So there's a complex relationship through time between store-of-value pricing and medium-of-exchange pricing, with store-of-value/investment being by far the bigger of the two, even though it itself is largely powered by prospects for eventual medium-of-exchange pricing. It's that kind of complex interplay through time. Nevertheless, there's a reason why the old holders don't sell much: they believe in the future potential, and they know that even if it takes years to get there the price would have to appreciate wildly fast to be ready by then.

This post explains it much better.

Here are some figures from the BIT investor's presentation. Note how miniscule e-commerce and remittances are compared to simple store-of-value functionality, which is an area where the advantages of Bitcoin are just as pronounced - if not more.

[Walsoraj]

Another theory about why there is so little resistance to the current climb:

1) many of the largest bitcoin holders were criminals and/or money launderers; and

2) ^ have been scared away from the major exchanges due to regulation and government actions over the summer.

[theonewhowaskazu]

Its probably fairly likely that people will get sub-200 BTC at about a week from now when Bitstamp finally hits the wall. Gox generally follows, even though the fiat is stuck. It'll be interesting to see how big that correction is. It might be your last chance ever to get sub-200 coins.

[Spaceman_Spiff]

my personal opinion is that bubbles should be spaced out longer than the time period between the last 2 bubbles as it takes longer for new innovations to bring about new growth curves.  the time period between the last 2 bubbles was about 21 months.  it is been only 6 months and people are already expecting another bubble event...  

But so much has changed.

look at this tx graph  https://blockchain.info/charts/n-transactions?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address=
the # of processed tx is a proxy for utility, earlier this year we got rid of dust tx and you could see the decrease, and now an increase which means that some new value has been brought in but we are not talking 10X yet. in the last bubble the magnitudinal (10x) tx increase preceded the massive (10x) price range shift

I agree with you on the fact that I think it is too soon for another bubble (although the current price action seems to disagree).
However, I don't think number of transactions is the only measure for utility.  It measures bitcoins utility as a medium of exchange (although people can obviously mess with the metric to try and influence the market), but not bitcoins utility as a store of value.  When people are convinced that bitcoin will be around in the future, they will feel safe to park some percentage of their wealth into a "bitcoin savings account", also known as "hoarding".  To me, this is a legitimate use for your bitcoins.

[Spaceman_Spiff]

I think it's a myth that Bitcoin's value mostly stems from transaction value or merchant adoption. The real driving force is long-term investment. Or rather, the value does stem from transaction value and merchant adoption, but not present transaction value or merchant adoption but future transaction value and merchant adoption. One of the things that investors do is drive up the price of things that will serve a valuable function in the future, since most people won't buy them now since they're not valuable for that purpose now.
So there's a complex relationship through time between store-of-value pricing and medium-of-exchange pricing, with store-of-value/investment being by far the bigger of the two, even though it itself is largely powered by prospects for eventual medium-of-exchange pricing. It's that kind of complex interplay through time. Nevertheless, there's a reason why the old holders don't sell much: they believe in the future potential, and they know that even if it takes years to get there the price would have to appreciate wildly fast to be ready by then.

You beat me to it 

[nottorious91]

Another theory about why there is so little resistance to the current climb:

1) many of the largest bitcoin holders were criminals and/or money launderers; and

2) ^ have been scared away from the major exchanges due to regulation and government actions over the summer.

Haven't actually thought about this but I think it must be pretty spot on. A lot of early adopters (miners) sold their coin during the early days and a lot of criminals kept accumulating wealth and not spend it on themselves, but resupply, etc.. Now due to the crackdown on SR they aren't moving a finger.

Wouldn't be surprised if now a lot of the btc that used to be for sale (by criminals) are off the market for a while.

[prophetx]

Another theory about why there is so little resistance to the current climb:

1) many of the largest bitcoin holders were criminals and/or money launderers; and

2) ^ have been scared away from the major exchanges due to regulation and government actions over the summer.

i would have to go with this and add that...

some never reported their btc income a couple years ago when they mined it or were paid for services  (maybe didnt know what to do with it and it was monopoly money at the time) and don't want their btc showing up at places that have instituted KYC...  you know what happens to money assets that you hide from the US govt after 3 years right... not saying it is right but that's the way it is...

[ardana123]

it's just the ultimate financial instrument and everyone will start realizing it in the next years

[Zangelbert Bingledack]

I think it's a myth that Bitcoin's value mostly stems from transaction value or merchant adoption. The real driving force is long-term investment. Or rather, the value does stem from transaction value and merchant adoption, but not present transaction value or merchant adoption but future transaction value and merchant adoption. One of the things that investors do is drive up the price of things that will serve a valuable function in the future, since most people won't buy them now since they're not valuable for that purpose now.
So there's a complex relationship through time between store-of-value pricing and medium-of-exchange pricing, with store-of-value/investment being by far the bigger of the two, even though it itself is largely powered by prospects for eventual medium-of-exchange pricing. It's that kind of complex interplay through time. Nevertheless, there's a reason why the old holders don't sell much: they believe in the future potential, and they know that even if it takes years to get there the price would have to appreciate wildly fast to be ready by then.

You beat me to it  

I think the reason store-of-value as a price driver isn't talked about more is because it's sort of taboo. To those who are less familiar with Bitcoin and its potential, it makes Bitcoin sound like a ponzi scheme the more store-of-value functionality is emphasized. So there's a taboo on pushing that angle. Of course there's always a taboo on saying, "Buy this thing (which I, uh, also just happen to own) because it's going to go up massively in price!" Nevermind that that's about the best, most generous, most helpful advice you could have given anyone at almost any time in the past four years; it's just not socially OK to do.

People also naturally tend to speculate, whereas merchant adoption doesn't come without proactive efforts, at least in these early days. So there's all around a large bias toward hush-hush on the store-of-value aspects. The problem is that people then get confused about the investment aspects and what's driving the price. But socially, that's not considered something you have any obligation to help people with, and people often aren't very grateful even when you do help them and even when you can prove they would have been wealthy by now if they had just followed your advice. The human mind just doesn't work that way.

[Spaceman_Spiff]

You beat me to it  

I think the reason store-of-value as a price driver isn't talked about more is because it's sort of taboo. To those who are less familiar with Bitcoin and its potential, it makes Bitcoin sound like a ponzi scheme the more store-of-value functionality is emphasized. So there's a taboo on pushing that angle. Of course there's always a taboo on saying, "Buy this thing (which I, uh, also just happen to own) because it's going to go up massively in price!" Nevermind that that's about the best, most generous, most helpful advice you could have given anyone at almost any time in the past four years; it's just not socially OK to do.
People also naturally tend to speculate, whereas merchant adoption doesn't come without proactive efforts, at least in these early days. So there's all around a large bias toward hush-hush on the store-of-value aspects. The problem is that people then get confused about the investment aspects and what's driving the price. But socially, that's not considered something you have any obligation to help people with, and people often aren't very grateful even when you do help them and even when you can prove they would have been wealthy by now if they had just followed your advice. The human mind just doesn't work that way.

I think merchant adoption is an important prerequisite to the "store of value" function though.  It gives bitcoin the initial legitimacy it needs to survive.  Once confidence is built that you will be able to utilize your bitcoins in a meaningful way, then it makes sense to save in bitcoins.

[Zangelbert Bingledack]

I think merchant adoption is an important prerequisite to the "store of value" function though.  It gives bitcoin the initial legitimacy it needs to survive.  Once confidence is built that you will be able to utilize your bitcoins in a meaningful way, then it makes sense to save in bitcoins.

You're absolutely right. The two drive each other, and merchant adoption is the final fallback for the price, at least theoretically.

The problem comes when people look at the price and say it's not justified by merchant adoption or transaction volume. Store of value and medium of exchange (SoV and MoE) are the two giant dynamos driving Bitcoin adoption, but while MoE is the ultimate theoretical grounding for the price, SoV is what the vast part of the actual price level is determined by. I think it's like 95% or 98% store of value, the rest being MoE. That may be one reason the SR shutdown barely affected the price even though it supposedly had a million users (inflated of course, but had to be at least 100,000 or more, and a lot of money was being moved).

So I think the biggest near-term drivers will actually be things like IMF haircuts and capital controls more than new merchants. The major commercial adoption will come later.

As that post on reddit put it, "The [investors] that invest based on a sound assessment of Bitcoin's future potential serve as a proxy for actual present commercial adoption by boosting the price in the present to a degree commensurate with how likely commercial adoption will be to take hold in the future. To misunderstand this is to misunderstand investing itself, as well as to misconstrue much of what is happening in the Bitcoin world."

[impulse]

Nevermind that that's about the best, most generous, most helpful advice you could have given anyone at almost any time in the past four years; it's just not socially OK to do.

I have been telling people about Bitcoin for more than 2 years, making them "aware" of it while trying not to push it hard, and recommending the, "not more than you can afford to lose" approach. I have always believed that Bitcoin is just too important to ignore, and has too much potential to not invest SOMETHING in it, even it it is a very small amount. Investing $100 at any point during late-2011 and 2012 would have yielded between about a $1500-$10000 return as of today. That's crazy! All in all, I'm sure that I have told no less than 40 people about it and not one person has bought in. It actually makes me kind of sad.

[Spaceman_Spiff]

Nevermind that that's about the best, most generous, most helpful advice you could have given anyone at almost any time in the past four years; it's just not socially OK to do.

I have been telling people about Bitcoin for more than 2 years, making them "aware" of it while trying not to push it hard, and recommending the, "not more than you can afford to lose" approach. I have always believed that Bitcoin is just too important to ignore, and has too much potential to not invest SOMETHING in it, even it it is a very small amount. Investing $100 at any point during late-2011 and 2012 would have yielded between about a $1500-$10000 return as of today. That's crazy! All in all, I'm sure that I have told no less than 40 people about it and not one person has bought in. It actually makes me kind of sad.

Don't be sad.  If you brought the story correctly, they 'll probably buy in a year earlier than they would have without your advice.  It takes some getting used to the idea.