While volume is sinking in the middle of the week

[notig]

EDIT: I meant to post this in the speculation forum. Sorry.

I am really confused about this market right now. Here are my thoughts:

When you look at the chart of bitcoin this year one thing seems inescapable... that we are still overvalued. It almost seems as if bitcoin would have to violate some kind of charting laws to remain this high or keep going up........ but then I don't have much experience or trust in charts. It just looks that way.

There isn't much buying pressure or selling pressure. The price is stableish and the volume is dropping. This usually results in a breakout... buyers getting impatient and the price jumping. It almost seems though that all this new money on gox doesn't want coins at this price they are just waiting for cheaper coins. If they don't get the drop their money might just leave or wait longer for a price drop. But it seems like with the amount of people waiting to buy in cheap at 50-60 that the price will never be able to get that low any time soon.

On the other hand I think people are learning from panic selling that it might not be a good idea when you drop under 100 to keep panic selling because the price just rebounds.

In the next 6 months I can't really tell if the price will drop to 50 or rise to 200. My guess is somewhere in there!  Below 50 just seems too cheap when the question of whether bitcoin can succeed as a new currency is still up in the air and in doubt but looking positive (because of all the good news).

So here is my guess: we will see a slow increase to almost 120 by the weekend then a drop back to maybe 115... and next week we will see an increase to 130.

I never guess right though

[coastermonger]

I'm worried that we might be entering into a very long term sell off, the price may gradually dip and spike but overall each new peak or "hill" will be lower than the last.  Bitcoin has to outpace it's current 13% inflation rate in order to rise.  That's easy to do if it's a relative unknown exploding into a new population, but once it's saturated it's likely market then there's no more support

[WilderedB]

Saturated?

The only people I know in the real world that have ever heard of bitcoin only heard of it because I told them a couple of months ago. There is still huge potential out there for newcomers who've never heard of it.

I also think that for many people, when they hear of bitcoin again in a few months will realise it's still here, still going and then jump on board.

In the meantime, making predictions about this weekend or next weekend is pretty meaningless. Try and think in months instead of minutes...

[bassclef]

Then there is the difficulty/price correlation. The more miners, the higher the difficulty, the more secure the network, the more likely Average Joe will buy coins. ASICs will burst onto the scene this summer and if this correlation is true, price will go up.

[ssshhh]

Are you looking at mtgox data only?

Maybe the people are no longer comfortable with mtgox?

[bozak]

There are no "charting laws" to be violated.  In the stock market, many participants believe in technical analysis, but the only reason it works is because enough people follow it.  It is unlikely that BTC will follow technical analysis rules.  It is different in so many ways from a stock that comparisons to the stock market and stock market technical analysis are irrelevent.  In the stock market, fundamental analysis is much better than technical analysis, unfortunately, there really is not a way to measure BTC based on fundamentals (it does not have cash flow, a balance, profits, projections). 

[bozak]

I'm worried that we might be entering into a very long term sell off, the price may gradually dip and spike but overall each new peak or "hill" will be lower than the last.  Bitcoin has to outpace it's current 13% inflation rate in order to rise.  That's easy to do if it's a relative unknown exploding into a new population, but once it's saturated it's likely market then there's no more support

Good point, but the counter argument is that "saturation" will not happend for a very long time.  It is possible that saturation of new users/buyers will not happen for a decade or more.   

[Rampion]

I'm worried that we might be entering into a very long term sell off, the price may gradually dip and spike but overall each new peak or "hill" will be lower than the last.  Bitcoin has to outpace it's current 13% inflation rate in order to rise.  That's easy to do if it's a relative unknown exploding into a new population, but once it's saturated it's likely market then there's no more support

And why are you worried? Cheaper coins for you and all of us. Aren't you happy to buy more BTC with your limited fiat?

EDIT: I was worried when we went into parabolic growth. That was worrying indeed. Was not sustainable. This is good for everybody, except the ones that entered very very late and were in just for the fiat profits.

[ThatDGuy]

Then there is the difficulty/price correlation. The more miners, the higher the difficulty, the more secure the network, the more likely Average Joe will buy coins. ASICs will burst onto the scene this summer and if this correlation is true, price will go up.

I don't believe price follows difficulty at all, if anything it is the inverse.  The Average Joe won't care or can't understand how difficulty and mining works.  The Average Joe would want a Bitcoin to either spend, invest, or speculate with.  I think price will go up significantly when those three goals are made significantly easier for the Average Joe.

[wamatt]

I don't believe price follows difficulty at all, if anything it is the inverse.  The Average Joe won't care or can't understand how difficulty and mining works.  The Average Joe would want a Bitcoin to either spend, invest, or speculate with.  I think price will go up significantly when those three goals are made significantly easier for the Average Joe.

agree with this.

[iikun]

Then there is the difficulty/price correlation. The more miners, the higher the difficulty, the more secure the network, the more likely Average Joe will buy coins. ASICs will burst onto the scene this summer and if this correlation is true, price will go up.

I don't believe price follows difficulty at all, if anything it is the inverse.  The Average Joe won't care or can't understand how difficulty and mining works.  The Average Joe would want a Bitcoin to either spend, invest, or speculate with.  I think price will go up significantly when those three goals are made significantly easier for the Average Joe.

I agree. Bitcoins success as a currency lies in people buying into the concept. Sure network security is a significant factor to consider, but it's everyday usefulness, as well as price stability is a much more significant one.  Just look at countries around the world where the USD is/has been the defacto currency due to the native currency's hyperinflation. Bitcoin will suffer the same fate if at some point the price doesn't settle more.

It's possible that ASICs will push the price down too I think. The more BTC controlled by a very small number of parties (AM for one, Avalon perhaps another), the less likely new people will buy in. Why?  For the same reason BTC became popular in the first place, decentralization (or in this case a move towards centralization as the ASIC companies gain a larger and larger percentage of the currency as a whole.)  You could probably argue that these companies will not risk price manipulation in order to maximize long term profits etc, but they are in this for the money too, esp AM as they've proved with their overpriced USBs. With risk of price manipulation, the attractiveness will drop.

So saying, I am in on one of the chip buys and am hoping the price will settle more in the not too distant future. Adoption of bitcoin by the likes of Paypal or a major online retailer would also be a major boom for BTC.

[ThatDGuy]

I agree. Bitcoins success as a currency lies in people buying into the concept. Sure network security is a significant factor to consider, but it's everyday usefulness, as well as price stability is a much more significant one.  Just look at countries around the world where the USD is/has been the defacto currency due to the native currency's hyperinflation. Bitcoin will suffer the same fate if at some point the price doesn't settle more.

This is a really interesting point.  Part of the developing infrastructure that is fascinating, however, is increasing the ease of converting fiat to BTC and back.  Allowing quicker and easier conversion could allow Bitcoin or a different cryptocurrency with faster transaction times for smaller purchases to be used while not having to be affected much at all by the volatility, in lieu of services like Paypal or in situations or areas where credit isn't as easily accessible.

It's possible that ASICs will push the price down too I think. The more BTC controlled by a very small number of parties (AM for one, Avalon perhaps another), the less likely new people will buy in. Why?  For the same reason BTC became popular in the first place, decentralization (or in this case a move towards centralization as the ASIC companies gain a larger and larger percentage of the currency as a whole.)  You could probably argue that these companies will not risk price manipulation in order to maximize long term profits etc, but they are in this for the money too, esp AM as they've proved with their overpriced USBs. With risk of price manipulation, the attractiveness will drop.

This is where things could really get shaken up over the next year or so.  ASICs are currently available to people who have a significant amount of Bitcoin already.  They are also application specific so it's equipment with little to no resale value it Bitcoin goes away.  I think either that reason or yours above of potential centralization could combine to make an altcoin like LTC relatively more attractive in the short term until ASICs can be bought with fiat and on a smaller scale.  That said, I do think companies like AM and Avalon and the first-movers who invest there deserve to make a good to great ROI.

I also think the USBs are also overpriced, but they have a monopoly right now - and people are showing they are willing to pay the price.  Hopefully the subsequent rounds of them are priced lower and they can act like the entry-level GPUs of the energy efficient realm.

[iikun]

I agree. Bitcoins success as a currency lies in people buying into the concept. Sure network security is a significant factor to consider, but it's everyday usefulness, as well as price stability is a much more significant one.  Just look at countries around the world where the USD is/has been the defacto currency due to the native currency's hyperinflation. Bitcoin will suffer the same fate if at some point the price doesn't settle more.

This is a really interesting point.  Part of the developing infrastructure that is fascinating, however, is increasing the ease of converting fiat to BTC and back.  Allowing quicker and easier conversion could allow Bitcoin or a different cryptocurrency with faster transaction times for smaller purchases to be used while not having to be affected much at all by the volatility, in lieu of services like Paypal or in situations or areas where credit isn't as easily accessible.

Yes, I think you're right there.  The ability to switch back & forth from fiat to cryptocurrency more easily was always going to be the thing to push it over the edge into the mainstream, but I didn't consider that it would also strengthen the price as well. Good point. How this can be achieved will be interesting to watch.

[mccorvic]

The dumpers are all dumped out, but the buyers don't yet know this and are waiting around for the next dump.

And that's my completely unsubstantiated theory.