Bitcoin Forum
May 20, 2018, 06:54:06 PM *
News: Latest stable version of Bitcoin Core: 0.16.0  [Torrent]. (New!)
   Home   Help Search Donate Login Register  
Pages: [1]
Author Topic: Bitcoin price consideration  (Read 520 times)
Full Member
Offline Offline

Activity: 195
Merit: 101

DiMS dev team

View Profile
May 24, 2013, 11:53:44 AM

Bitcoin  price  consideration

I  think  that  many  people  to easily  fall in  to  trap  of  oversimplification  topic of  bitcoin  price. I  think  that therms  low or  high  price  are  used improperly
As  far   as I can  see it there  are  two  main  component factor  which  determine  bitcoin  price.

adaptation ( strong factor  ) +  speculation ( weak factor )  =  bitcoin   price

In  my  opinion to determine if  bitcoin  price  is  high  or  low, one  has to  evaluate  how  many  coins is  in  possession of  speculators and  how  many  of  them  are  stored  by  adapters.
When  most  of  coins  stays in speculators  hands  it is  sign  that bitcoin  is  overvalued and  it  is  time  to  consider  selling  or  at  least to  stop  buying , obviously something opposite
happen  when  most  coins  are in  adapters  hands. In my  opinion   it is  completely  irrelevant  how  many  digits the current  price  has. So  what  we  really  need to  do  is  evaluate   ratio  between  adopters  and  speculators stash.

My observation about recent  climb  in  value.   In  january  when  production  of   new  bitcoin  drop  by   factor  of  two, what  happened then  was  mismatch between  bitcoin  emission  and  adaptation grown.
I think  there  is  some permanent increase of  adaptation  which is  probably  proportional to  current adaptation  base, plus some factor  of  media  hype.  After  halving  there was  rapid  decline  in  coin  production, the  supply couldn't  keep  up  with  demand  so  price  started  to  increase, it causes  inevitable interest in some speculators  circles  and  those  attention  have additional  huge  positive  impact on  price , but  where  a lot  of  coins  bought  by  price  10 $  hit  the  market, speculators  couldn't  kept up  .  as  a  result  we  saw  huge  decline  in  value , as  we  saw  later  decline  wasn't  so  huge,  most probably  adapters at  some  point regain  power  over  market as  the result of  all that  we  see  stabilization  around 120
I predict that as  long  as   speculators  have  huge  chunk  of  coins  we   do  not  see any  substantial rise  in  value. Because  price  stabilization more  and  more  speculators  will  probably  withdraw  their   funds to  some  other  markets ,  those   gaps  will  be  replaced by  adapters  to  the point  where  we  see mismatch  between  bitcoin  creation and  demand again and  another  rally.

But   lets do  some  simplified  maths

gov - government  attention
mh  -  media hype
ar -  adaptation rate

sc -  peculator coins
swf - speculators withdrawal  factor

bc -  bitcoin  creation

at  any  point  this   equation  determine  demand

( mh + ar - gov )  - bc  - sc * swf =  d

when  d is  negative  price  will fall  when  positive  will  climb

so  make   comparison  between 2011 and 2013

2011    :        2013
mh      <        mh    - ( + 2013 )     
ar      <        ar    - this is  probably  proportional  to  current adoption level( + 2013 )
gov     <        gov   - sauron  eye is  watching  more and  more  closely( - 2013 )
bc      >        bc    - ( + 2013 )

sc * swf  - can't  really  evaluate  this  but  I have  feeling  in  my  guts  that   speculators have less  bitcoin  than  in  correspond  period in  2011

( + 2013 )  - means  positive impact  on  price   in 2013  in  respect  to  2011
( - 2013 )  - means  negative impact  on  price   in 2013  in  respect  to  2011

Above clearly  shows  that  price   will climb  sooner than in  2011  if  only  government  do not  play some very  nasty tricks
I am  sitting on  some  bitcoin,  I  consider  myself  as  adopter

I  use bitcoin mostly as  hedge  against irresponsible rule  of  government and   central  banks
In  much  lesser extend  I  hope  to  use bitcoin  for  money transfer( in  my  opinion  it is only  reasonable between  countries at least  on  current  stage )
for  daily  trade  I am  using  fiat

donate: 18tMzmy2B2RFCmLK7FyZ8rWZEjzjYmHqpd
Pages: [1]
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!