260 is cheap, 60 is expensive, 130 is cheap

[anu]

I don't get it. Some buy at 260, apparently they think it is a good price. Later, they won't support when the price goes to 60, apparently because they think it is too expensive. Now, 130 seems a really good bargain to many again. All within a few days and without the tiniest change in what Bitcoin is.

Someone please explain the "buy high - sell low" strategy to me.

[drawingthesun]

I don't get it. Some buy at 260, apparently they think it is a good price. Later, they won't support when the price goes to 60, apparently because they think it is too expensive. Now, 130 seems a really good bargain to many again. All within a few days and without the tiniest change in what Bitcoin is.

Someone please explain the "buy high - sell low" strategy to me.

One word applies: Insanity.

Its hard to comprehend what is happening at the moment, whos buying at $130 a day after $90? I'm guessing market manipulaion. Someone is driving the price up for a dump and suckers are buying into it.

[ManBearPig]

It's crazy. It's almost as if this word "people" refers to...

More than one person :p

[drawingthesun]

It's crazy. It's almost as if this word "people" refers to...

More than one person :p

Haha, this is true.

[Le Happy Merchant]

Whos selling at $130 a week after $260? I'm guessing market manipulaion. Someone is driving the price down for a bargain on coins and suckers are selling into it.

Every story has two sides.

[JimiQ84]

If you take bitcoin as lottery it's completely normal. I also take bitcoin as lottery, only waiting for "good numbers" (meaning $50k per 1 BTC )

[drawingthesun]

Whos selling at $130 a week after $260? I'm guessing market manipulaion. Someone is driving the price down for a bargain on coins and suckers are selling into it.

Every story has two sides.

I agree, but If people are selling after it collapsed from $260 down to $50 and up to $130, well thats a rational choice. Many people are expecting a downward slope keeping around $60 - $90 and now it just jumped it makes sense a lot of people will bail. And those that have driven down the price (It was obvious someone was behind starting the panic sell) have already bought back in at $50 and $60. So the rise now is odd.

I want to know who is really buying after a $40 increase in one day? Someone selling to themselves perhaps?

[Le Happy Merchant]

I want to know who is really buying after a $40 increase in one day? Someone selling to themselves perhaps?

I can explain this, but its a bit convoluted and I am too tired right now. If nobody has explained it by tomorrow, I will take a swing at it.

[drawingthesun]

I want to know who is really buying after a $40 increase in one day? Someone selling to themselves perhaps?

I can explain this, but its a bit convoluted and I am too tired right now. If nobody has explained it by tomorrow, I will take a swing at it.

Cheers pal

[anu]

I want to know who is really buying after a $40 increase in one day? Someone selling to themselves perhaps?

I can explain this, but its a bit convoluted and I am too tired right now. If nobody has explained it by tomorrow, I will take a swing at it.

Looking forward to that explanation. Particularly in Bitcoin, no strategy is better than simply holding. Even those people who bought at $32 in June 2011 look pretty good now - 400% in 2 years - except if they were stupid enough to sell at $2 in October.

Even those people who bought at $260 a few days back will look pretty good in 2 years when the default of France and Japan pushes Bitcoin to 20,000.

(One can of course ask what the value of $20,000 will be then) 

[DrG]

I want to know who is really buying after a $40 increase in one day? Someone selling to themselves perhaps?

I can explain this, but its a bit convoluted and I am too tired right now. If nobody has explained it by tomorrow, I will take a swing at it.

Looking forward to that explanation. Particularly in Bitcoin, no strategy is better than simply holding. Even those people who bought at $32 in June 2011 look pretty good now - 400% in 2 years - except if they were stupid enough to sell at $2 in October.

Even those people who bought at $260 a few days back will look pretty good in 2 years when the default of France and Japan pushes Bitcoin to 20,000.

That's why you buy the coins you can afford to not touch and put them in a safe wallet.  You put your play money on the exchange. Up until tonight I was only doing #1 (primarily due to fears of hacks on exchanges), finally going to start messing with my "monopoly" money.

[Zaih]

Just chuck it in and see what happens burtha

[jinni]

I want to know who is really buying after a $40 increase in one day? Someone selling to themselves perhaps?

I can explain this, but its a bit convoluted and I am too tired right now. If nobody has explained it by tomorrow, I will take a swing at it.

Looking forward to that explanation. Particularly in Bitcoin, no strategy is better than simply holding. Even those people who bought at $32 in June 2011 look pretty good now - 400% in 2 years - except if they were stupid enough to sell at $2 in October.

Even those people who bought at $260 a few days back will look pretty good in 2 years when the default of France and Japan pushes Bitcoin to 20,000.

(One can of course ask what the value of $20,000 will be then) 

You got it. I buy as much as I can at any price and think it is cheap, usually every month after I get my paycheck. It is impossible to predict short term swings, but it is possible to make a pretty decent long term bet.

[Le Happy Merchant]

Ok, here goes. Please forgive the wall of text.

There are a few categories of people who are buying right now, I will address each of them individually.

Firstly, there are those who wanted in a while ago. Several people I know have wanted in since the price was $20, but always said to me "After an increase like that, I think it would be smarter just to wait for it to come back down a little," and when the time finally came for the drop, they finally got off their asses and decided to seriously look into how they could buy Bitcoin. For many the process is slow and arduous.  For instance even though my parents effectively have access to a verified Mt.Gox account through me, it took them 7 business days to get their money to me from their (foreign) bank. My parents and others like them just watched the price jump by a factor of 20, and they missed the train. I don't expect that many of these people are market experts, or even know how to check the bid and ask walls. All they know is that they don't want to miss out again.

Second, there are the true believers in Bitcoin. The people who take some chunk of their paycheck every week and buy Bitcoins. This is self explanatory, and based on what I have seen this is a very small portion of the total demand, though it does exist.

Third, there are the 'big men upstairs' who see where this is going and want in. They don't just want in a little either, they want to jump into a speeding dump-truck and take the wheel. To effectively do this they need coins. (As an aside, please note: Many companies out there, and some individual people could easily say that they have more money than the market cap of Bitcoin has ever been. Something like this should be scary, but it should also make people realize just how cheap Bitcoins truly are right now.) While the price of Bitcoins was above the first time until the 'crash' the total depth on the ask side was scant, a single large move to buy could cause the price to rise to absurd levels in a very short time. To solve this, the price was allowed (or forced) to rise, and then allowed (or forced) to crash. This crash brought more coins out of the woodwork than have ever been seen on Gox, the volume seen in the past week is amazing, and its just what a big investor would want. Now that the ask wall is refilled, the buyer can freely purchase coins all the way back up to the price of the crash, that were completely unavailable only a week ago.

Fourth, and I think this is a big part of it, the people who sold on the way down, but haven't bought back in yet. They were waiting for the right time, and each cent we creep up, they sweat a little bit more until they crack and buy back in. Higher than they could have, but lower than what they sold for, just so they can sleep at night knowing they hold Bitcoins. These are the people who make the price what it is, because if they hadn't sold, it wouldn't have crashed, and if they had bought back in sooner, it wouldn't have gone so low.

Penultimately, there are those who only recently heard about Bitcoin, get it, and want it because it makes sense. I would like to imagine that a large portion of money flowing into the exchanges right now is people who understand the underlying principles of Bitcoin, and think it will succeed. They might now understand the right time to buy and sell, but they know they want in.

Lastly, the people who matter most. The people who buy Bitcoins exclusively to use them as a medium of exchange. They are the driving force of the speculators, but to them the price is completely irrelevant. If they want to spend $100 dollars, it makes no difference if the price per coin is $1 or $10000, because they only need to hold it for an hour at most to complete the transaction. They are willing to bet that the price will be reasonably similar to what it was an hour ago, because much of what they have to buy is unavailable anywhere else at such convenience.

On the other hand: The sellers. This list is much shorter, and I believe it illustrates my point from my earlier post pretty well.

The scary sellers, are people who actually do not believe in Bitcoin at all. They saw the price rising, and wanted to make money, but when they see it falling they panic and sell everything they have, even taking a major loss, just to avoid even worse losses. These people deserve their losses, and line our pockets. I have no sympathy.

The other people that sell are a bit more measured, they believe in Bitcoin, and they want more of them. They plan to sell what they have now, so that they can buy more later. It makes sense in theory, but when there are more of this kind of seller than the other kind, we end up at a falsely low price. It ends with the people who sold scrambling to get their coins back before the other people who sold get them.

My final thoughts: We shook out the scary sellers, all that is left is people who actually want more Bitcoins, and eventually, when people want more of something, the price rises.

[el_rlee]

260 is cheap, 60 is expensive, 130 is cheap

This concept is called "chart reading".

[Elwar]

Someone please explain the "buy high - sell low" strategy to me.

One word: volume

[oda.krell]

[very long, very insightful post about what (most likely) motivates current buyers and sellers]

Didn't get much attention, but was very much worth reading. Thanks.

/4daythreadnecromancy

[Gordonium]

Everything under 1000$/BTC is so cheap that you can't even understand it. Bitcoin is still the most undervalued asset in the history of finance.

[Kazu]

Well...

$130 was cheap.

 

[Jaroslaw]

In few days 260 will be cheap