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

[brg444]

This is why I think that that cannot be the support for the bitcoin price for a long, long time.  I think that the main steady state drive will be "buying stuff", with my formula.

Speculation will be the driving force for Bitcoin until mass adoption.

It was designed by Satoshi to be so. Speculation is the bootstrapping method for Bitcoin to gain mass acceptance and only then will it realize its promises as a mean-of-exchange

[dinofelis]

that monetary velocity formula is a convenient fiction for ivory tower academic economists, e.g. I don't see anything about an human psychology factor in there.

Here's the one I use:

Bmo = N x A

Bmo ~ total value bitcoin M0 (also called 'market cap')
N ~ total number of entities holding bitcoins
A ~ average Amount of value holding entities are willing to hold in btc

It appears likely that N is only going to keep increasing for the forseeable future (perhaps with exponential adoption rates at times).
A will stay around the same but also may increase as the confidence in holding value in btc becomes firmer.

Yes, that is also correct, but it is the aspect of aggregate demand for store of value in bitcoin.  
In fact, you ALSO have a "velocity" aspect in your formula, but it is hidden in N !  
You are considering people "storing value for a long time" in N.  
But it is in fact the "average number of people at a given moment in time wanting to store value A in bitcoin".
This average could be made up by 100 people holding coins indefinitely ; or it could be made up by 1200 people per year wanting to store value A for a month.  Or it could be made up by 10 people per year wanting to store value for 10 years.

As I said in my earlier posting, I don't believe that bitcoin will be considered as a secure store of value for a very, very long time.  I think the main price drive will come from bitcoin buying stuff.

Honestly, would *you* store value in bitcoin right now, if you didn't have any expectation of growth of its value ("to the moon") ?

[ChartBuddy]

Explanation

[brg444]

that monetary velocity formula is a convenient fiction for ivory tower academic economists, e.g. I don't see anything about an human psychology factor in there.

Here's the one I use:

Bmo = N x A

Bmo ~ total value bitcoin M0 (also called 'market cap')
N ~ total number of entities holding bitcoins
A ~ average Amount of value holding entities are willing to hold in btc

It appears likely that N is only going to keep increasing for the forseeable future (perhaps with exponential adoption rates at times).
A will stay around the same but also may increase as the confidence in holding value in btc becomes firmer.

Yes, that is also correct, but it is the aspect of aggregate demand for store of value in bitcoin.  
In fact, you ALSO have a "velocity" aspect in your formula, but it is hidden in N !  
You are considering people "storing value for a long time" in N.  
But it is in fact the "average number of people at a given moment in time wanting to store value A in bitcoin".
This average could be made up by 100 people holding coins indefinitely ; or it could be made up by 1200 people per year wanting to store value A for a month.  Or it could be made up by 10 people per year wanting to store value for 10 years.

As I said in my earlier posting, I don't believe that bitcoin will be considered as a secure store of value for a very, very long time.  I think the main price drive will come from bitcoin buying stuff.

Honestly, would *you* store value in bitcoin right now, if you didn't have any expectation of growth of its value ("to the moon") ?

I wouldn't but the reality is the expectation of growth in its value exist and you cannot simply pretend to remove it from your equation because it fits your argument.

Bitcoin is absolutely a secure store of value. More secure than any alternatives on the market. Stable? Obviously not but is stability a requisite to qualify as a store of value? I do not think so. Especially when considering this growth expectation it makes even more sense to store the value of your wealth in such an asset.

If you choose to ignore the daily fluctuation and look at the big picture, Bitcoin has been trending up since its inception. It has been what some would qualify as an EXCELLENT store of value historically, especially for those who were early to adopt it.

So far Bitcoin as grown exactly because of its store of value properties and certainly NOT because of "Bitcoin buying stuff". Why should we expect this to change so soon?

[brg444]

that monetary velocity formula is a convenient fiction for ivory tower academic economists, e.g. I don't see anything about an human psychology factor in there.

Here's the one I use:

Bmo = N x A

Bmo ~ total value bitcoin M0 (also called 'market cap')
N ~ total number of entities holding bitcoins
A ~ average Amount of value holding entities are willing to hold in btc

It appears likely that N is only going to keep increasing for the forseeable future (perhaps with exponential adoption rates at times).
A will stay around the same but also may increase as the confidence in holding value in btc becomes firmer.

Yes, that is also correct, but it is the aspect of aggregate demand for store of value in bitcoin.  
In fact, you ALSO have a "velocity" aspect in your formula, but it is hidden in N !  
You are considering people "storing value for a long time" in N.  
But it is in fact the "average number of people at a given moment in time wanting to store value A in bitcoin".
This average could be made up by 100 people holding coins indefinitely ; or it could be made up by 1200 people per year wanting to store value A for a month.  Or it could be made up by 10 people per year wanting to store value for 10 years.

As I said in my earlier posting, I don't believe that bitcoin will be considered as a secure store of value for a very, very long time.  I think the main price drive will come from bitcoin buying stuff.

Honestly, would *you* store value in bitcoin right now, if you didn't have any expectation of growth of its value ("to the moon") ?

I wouldn't but the reality is the expectation of growth in its value exist and you cannot simply pretend to remove it from your equation because it fits your argument.

Bitcoin is absolutely a secure store of value. More secure than any alternatives on the market. Stable? Obviously not but is stability a requisite to qualify as a store of value? I do not think so. Especially when considering this growth expectation it makes even more sense to store the value of your wealth in such an asset.

If you choose to ignore the daily fluctuation and look at the big picture, Bitcoin has been trending up since its inception. It has been what some would qualify as an EXCELLENT store of value historically, especially for those who were early to adopt it.

So far Bitcoin as grown exactly because of its store of value properties and certainly NOT because of "Bitcoin buying stuff". Why should we expect this to change so soon?

TL;DR : All hail the hoarders http://nakamotoinstitute.org/mempool/im-hoarding-bitcoins-and-no-you-cant-have-any/

[ejinte]

Will my order at 367 get filled?

Nope

Seems like you're right. And now the weekend is coming to an end.  

[KFR]

Welcome back Adam. 

[shmadz]

Will my order at 367 get filled?

Nope

Seems like you're right. And now the weekend is coming to an end.  

And yet 370 was so close.

I've missed many times on this kind of shit, by only a couple dollars, and what I've realized is, at some point, you need to just take a position and quit quibbling over the nickels by the tracks while the train is gaining speed.

Again, I can't advise and I only wish you luck.

[T-Y-R]

Welcome back Adam.

i just stopped here to make a buy,

back into the time machine i go.

http://tiki.oneworld.net/time_machine/images/timemachine.gif

... and a new poll, maybe?

[dinofelis]

Honestly, would *you* store value in bitcoin right now, if you didn't have any expectation of growth of its value ("to the moon") ?

I wouldn't but the reality is the expectation of growth in its value exist and you cannot simply pretend to remove it from your equation because it fits your argument.

You seem to miss the point.  Growth ('to the moon') can obviously not last indefinitely.  At a certain point, steady state will have to set in.  Every form of speculation is essentially based upon a bet on that steady state value which is expected to be higher than right now, so that kind of speculation (which is now the main drive) will have to stop one day.  

So I propose to make the mental exercise to put yourself in the hypothetical situation where you eliminate mentally that speculative purpose, and try to find out your own drive to put value into bitcoin *for store of value* reasons, and not for "to the moon" speculative reasons.  I very well know that the actual situation is the speculative "to the moon" drive.  But in order to find out what is going to be the steady state situation, you have to be able to find out what would be the drive to hold bitcoin *without* speculative "to the moon" drive.

So in order to make that exercise, suppose that six months from now, for one or another reason, the bitcoin price has gone up to $ 500 000,- (and not because the dollar collapsed) and it stays there for 6 other months with fluctuations of 10% or so.  Obviously, at that price, the "to the moon" expectation afterwards is gone.  You do not expect it to rise to 10 million, do you.  You might still hope for a small factor of 2 or 3, but that's it.

Are you going to put your savings at that moment in $ 500 000,- coins ?  Seriously ?
(or are you going to sell part of what you have to cash in ? :-) ).


This, to find out if you *really* consider bitcoin a good store of value for your savings without any "to the moon" speculation anymore, just a reasonable potential to rise somewhat, like other stores of value like gold, real estate and the like.

Bitcoin is absolutely a secure store of value. More secure than any alternatives on the market. Stable? Obviously not but is stability a requisite to qualify as a store of value? I do not think so. Especially when considering this growth expectation it makes even more sense to store the value of your wealth in such an asset.

You are obviously missing the point, right.  *Of course* the speculative drive is the strongest one.  But it cannot last, of course.  Once it is over, I'm trying to find out what would be the drive.  Because ultimately, *that* drive is what is going to give bitcoin any value as store of value.  Otherwise, it is indeed, just Ponzi, if nothing holds it up once it cannot grow anymore.  Just to be clear, I don't think it is Ponzi.  But in order for it not to be, one has a clear view on its fundamentals.  Fundamentals are never "growth to infinity", but are "steady state" arguments that are sustainable.

In the long term, fundamentals always win.  That is why a real Ponzi, which has no fundamentals, always collapses.

So I'm trying to find out what are the fundamentals of bitcoin.  As I said, my opinion is that it is "money to buy stuff".  Some think it is "store of value".  My *opinion* which can be wrong, is that that can only come much later.  But "expectations to the moon" are never fundamentals by themselves.

[ChartBuddy]

Explanation

[dinofelis]

This is why I think that that cannot be the support for the bitcoin price for a long, long time.  I think that the main steady state drive will be "buying stuff", with my formula.

Speculation will be the driving force for Bitcoin until mass adoption.

It was designed by Satoshi to be so. Speculation is the bootstrapping method for Bitcoin to gain mass acceptance and only then will it realize its promises as a mean-of-exchange

Of course.  But speculation is always based upon an expectation in the future, and if that expectation is wrong, the speculator looses.  So rational speculation is based upon a long term estimate of the fundamentals.

And my aim here is to find out what those fundamentals are.  As you say, it can be mass adoption as "means-of-exchange", and then the "quantity theory of money" jumps in to indicate what will be the price of things in bitcoin, which will inversely indicate what will be the market price of bitcoin (as compared to other monetary assets such as $ that can buy the same stuff).

The market value of bitcoin "as a means of exchange" will then be the fundamental, and it is determined by how much stuff one can buy with it, and what is the average holding time between such buys, as that will determine the aggregate demand for bitcoin, and hence determine its market value.

The *other* fundamental is "store of value for the long term".  In my opinion, that can only come in once bitcoin is established as a means-of-exchange for some time.  Maybe I'm wrong here.

But speculation by itself, cannot be a fundamental.  It has to AIM for a fundamental.  And I'd like, in this discussion, to find out what it is.

[podyx]

Should I go long or wait for a dip??

[lay785]

going up and down too much per day. manipulators feeding on peoples longs and shorts.

[Bagatell]

going up and down too much per day. manipulators feeding on peoples longs and shorts.

I thought day tarders liked volatility.

[brg444]

You seem to miss the point.  Growth ('to the moon') can obviously not last indefinitely.  At a certain point, steady state will have to set in.  Every form of speculation is essentially based upon a bet on that steady state value which is expected to be higher than right now, so that kind of speculation (which is now the main drive) will have to stop one day.

Steady? As in... fixed? You do know that Bitcoin is a deflationary currency correct? Which means yes, the growth CAN and WILL last indefinitely.  

So I propose to make the mental exercise to put yourself in the hypothetical situation where you eliminate mentally that speculative purpose, and try to find out your own drive to put value into bitcoin *for store of value* reasons, and not for "to the moon" speculative reasons.  I very well know that the actual situation is the speculative "to the moon" drive.  But in order to find out what is going to be the steady state situation, you have to be able to find out what would be the drive to hold bitcoin *without* speculative "to the moon" drive.

Well the list is pretty long, but if you insist here's a few : 1. Deflationary 2. Ideal property as money 3. Distributed and outside the reach of any singular entity (read: government) 4. Programmable 5. Highly secure 6. Unseizable

So in order to make that exercise, suppose that six months from now, for one or another reason, the bitcoin price has gone up to $ 500 000,- (and not because the dollar collapsed) and it stays there for 6 other months with fluctuations of 10% or so.  Obviously, at that price, the "to the moon" expectation afterwards is gone.  You do not expect it to rise to 10 million, do you.  You might still hope for a small factor of 2 or 3, but that's it.

I can certainly envision it reaching 10 million per BTC in my lifetime. But lemme play along to your "scenario"....

Are you going to put your savings at that moment in $ 500 000,- coins ?  Seriously ?
(or are you going to sell part of what you have to cash in ? :-) ).

 

At this point it is clear you have no understanding of the dynamics at stake. At 500,000$ per coin I have no interest for your worthless fiat. No I am NEVER going to cash out because at that point it is clear and beyond evident that BTC has won. So yes, I am going to make sure every single penny I have is used to buy BTC. In fact, disregarding your speculative scenario, I can confirm to you that I am going to make this move MUCH earlier

This, to find out if you *really* consider bitcoin a good store of value for your savings without any "to the moon" speculation anymore, just a reasonable potential to rise somewhat, like other stores of value like gold, real estate and the like.

[/quote]

Bitcoin is a GREAT store of value, the best there is in fact. The reason for this is it is simply the best form of money that has ever been created. Gold pales in comparison to Bitcoin. Real estate can be seized through coercion or devalued by speculative market.

You are obviously missing the point, right.  *Of course* the speculative drive is the strongest one.  But it cannot last, of course.  Once it is over, I'm trying to find out what would be the drive.  Because ultimately, *that* drive is what is going to give bitcoin any value as store of value.  Otherwise, it is indeed, just Ponzi, if nothing holds it up once it cannot grow anymore.  Just to be clear, I don't think it is Ponzi.  But in order for it not to be, one has a clear view on its fundamentals.  Fundamentals are never "growth to infinity", but are "steady state" arguments that are sustainable.

In the long term, fundamentals always win.  That is why a real Ponzi, which has no fundamentals, always collapses.

So I'm trying to find out what are the fundamentals of bitcoin.  As I said, my opinion is that it is "money to buy stuff".  Some think it is "store of value".  My *opinion* which can be wrong, is that that can only come much later.  But "expectations to the moon" are never fundamentals by themselves.

The fundamentals are that Bitcoin is the best form of money that exists. Point blank. Period.
https://www.youtube.com/watch?v=gKkfhi8Eaiw

[brg444]

This is why I think that that cannot be the support for the bitcoin price for a long, long time.  I think that the main steady state drive will be "buying stuff", with my formula.

Speculation will be the driving force for Bitcoin until mass adoption.

It was designed by Satoshi to be so. Speculation is the bootstrapping method for Bitcoin to gain mass acceptance and only then will it realize its promises as a mean-of-exchange

Of course.  But speculation is always based upon an expectation in the future, and if that expectation is wrong, the speculator looses.  So rational speculation is based upon a long term estimate of the fundamentals.

And my aim here is to find out what those fundamentals are.  As you say, it can be mass adoption as "means-of-exchange", and then the "quantity theory of money" jumps in to indicate what will be the price of things in bitcoin, which will inversely indicate what will be the market price of bitcoin (as compared to other monetary assets such as $ that can buy the same stuff).

The market value of bitcoin "as a means of exchange" will then be the fundamental, and it is determined by how much stuff one can buy with it, and what is the average holding time between such buys, as that will determine the aggregate demand for bitcoin, and hence determine its market value.

The *other* fundamental is "store of value for the long term".  In my opinion, that can only come in once bitcoin is established as a means-of-exchange for some time.  Maybe I'm wrong here.

But speculation by itself, cannot be a fundamental.  It has to AIM for a fundamental.  And I'd like, in this discussion, to find out what it is.

Read this here : https://bitcointalk.org/index.php?topic=68655.msg9247581#msg9247581

These are the fundamentals we are dealing with.

[nioc]

going up and down too much per day. manipulators feeding on peoples longs and shorts.

BitcoinWisdom: 30 Day Change%:  +1.14   

[ChartBuddy]

Explanation

[YogoH]

cup and handle inc