Keeping Bitcoin Price High

[Xyver]

Well, lets all agree now then.  When the BTC price hits $120, everyone go buy something nice!

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[TheBanker]

if people would sell their coins in smaller portions instead of dumping them all at once they would get more $ for their coins and the market wouldnt take a dive. but maybe they want to create panic selling to buy back lower.

This is one of the smartest things I've read on these boards. I know this because I practice this too. I have had very frequent situations where I'm selling 150+ BTC at one time. This is A LOT harder than it sounds. Fortunately, I have a business and finance background that has given me some trading skills and I'm comfortable doing this (I also have multiple exchanges besides Gox to use). I'm TERRIFIED at the thought of these ASIC users with zero trading experience going on Gox on trying to sell their BTC in large chunks. They can completely collapse the market without even knowing it. Its like a baby crawling in a dark room putting their fingers in things - "let me see what happens when I plug into this socket . . . "

[Peter Lambert]

I'm trying to think of ways to have Bitcoin keep its value, instead of always fluctuating up and down.  As far as I know, it rises because lots of people buy coins, and once it hits a certain point, someone decides to sell a large amount, so the price drops a little bit, causing everyone else to sell, dropping the price lots.  It falls down, until it hits a low enough value that people wish to "buy back in", and then the price begins to rise again, and the cycle repeats.

My idea is that instead of waiting for the price to rise to sell coins, wait for the price to rise to buy something with coins.  Go to coingig, or bitcoinstore, and find an item that you want, and tell yourself "When Bitcoin hits 120$ (or any price), I'm going to buy this item instead of selling to an exchange.".

I think that this would help keep the price stable, as well as distribute the coins more, instead of keeping them all locked up in an exchange.

EDIT::  My knowledge of economics is minimal, so I could be way off.

If you go to a store and use your bitcoins to buy something, the guy who just got them will dump them in the market, so the overall effect on the price is very small.

Just to be clear, there is a very small effect, since there is that 1 hour wait for confirmations before the other guy can dump them on the market, but like I said it is a very small effect.

[TheBanker]

I'm trying to think of ways to have Bitcoin keep its value, instead of always fluctuating up and down.  As far as I know, it rises because lots of people buy coins, and once it hits a certain point, someone decides to sell a large amount, so the price drops a little bit, causing everyone else to sell, dropping the price lots.  It falls down, until it hits a low enough value that people wish to "buy back in", and then the price begins to rise again, and the cycle repeats.

My idea is that instead of waiting for the price to rise to sell coins, wait for the price to rise to buy something with coins.  Go to coingig, or bitcoinstore, and find an item that you want, and tell yourself "When Bitcoin hits 120$ (or any price), I'm going to buy this item instead of selling to an exchange.".

I think that this would help keep the price stable, as well as distribute the coins more, instead of keeping them all locked up in an exchange.

EDIT::  My knowledge of economics is minimal, so I could be way off.

If you go to a store and use your bitcoins to buy something, the guy who just got them will dump them in the market, so the overall effect on the price is very small.

Just to be clear, there is a very small effect, since there is that 1 hour wait for confirmations before the other guy can dump them on the market, but like I said it is a very small effect.

Thats not 100% true. There are services/exchanges that will let you cash BTC without any confirmations

[Peter Lambert]

I'm trying to think of ways to have Bitcoin keep its value, instead of always fluctuating up and down.  As far as I know, it rises because lots of people buy coins, and once it hits a certain point, someone decides to sell a large amount, so the price drops a little bit, causing everyone else to sell, dropping the price lots.  It falls down, until it hits a low enough value that people wish to "buy back in", and then the price begins to rise again, and the cycle repeats.

My idea is that instead of waiting for the price to rise to sell coins, wait for the price to rise to buy something with coins.  Go to coingig, or bitcoinstore, and find an item that you want, and tell yourself "When Bitcoin hits 120$ (or any price), I'm going to buy this item instead of selling to an exchange.".

I think that this would help keep the price stable, as well as distribute the coins more, instead of keeping them all locked up in an exchange.

EDIT::  My knowledge of economics is minimal, so I could be way off.

If you go to a store and use your bitcoins to buy something, the guy who just got them will dump them in the market, so the overall effect on the price is very small.

Just to be clear, there is a very small effect, since there is that 1 hour wait for confirmations before the other guy can dump them on the market, but like I said it is a very small effect.

Thats not 100% true. There are services/exchanges that will let you cash BTC without any confirmations

Right, so then instead of waiting 1 hour there is no waiting, so it makes even less impact on the price. Thanks for accentuating my point for me.

[TheBanker]

I'm trying to think of ways to have Bitcoin keep its value, instead of always fluctuating up and down.  As far as I know, it rises because lots of people buy coins, and once it hits a certain point, someone decides to sell a large amount, so the price drops a little bit, causing everyone else to sell, dropping the price lots.  It falls down, until it hits a low enough value that people wish to "buy back in", and then the price begins to rise again, and the cycle repeats.

My idea is that instead of waiting for the price to rise to sell coins, wait for the price to rise to buy something with coins.  Go to coingig, or bitcoinstore, and find an item that you want, and tell yourself "When Bitcoin hits 120$ (or any price), I'm going to buy this item instead of selling to an exchange.".

I think that this would help keep the price stable, as well as distribute the coins more, instead of keeping them all locked up in an exchange.

EDIT::  My knowledge of economics is minimal, so I could be way off.

If you go to a store and use your bitcoins to buy something, the guy who just got them will dump them in the market, so the overall effect on the price is very small.

Just to be clear, there is a very small effect, since there is that 1 hour wait for confirmations before the other guy can dump them on the market, but like I said it is a very small effect.

Thats not 100% true. There are services/exchanges that will let you cash BTC without any confirmations

Right, so then instead of waiting 1 hour there is no waiting, so it makes even less impact on the price. Thanks for accentuating my point for me.

You're not clear on the velocity of the marketplace. At this moment in time, being able to convert to fiat instantly is NOT a good thing. You WANT people to stay in the world of BTC. BTC will never be a viable currency until people want to earn it, spend it AND hold on to it. Otherwise, its just a play thing that no one will take seriously. Besides, the trading is so thin right now that a couple of large purchases that are instantly put on Gox can have a widespread, negative effect. In my experience (keep in mind that I deal with some LARGE wallets) it can take as little as 100BTC to really affect the price. When I have 150+BTC to sell I take my time, usually at least 24 hours, sometimes more. 

[Peter Lambert]

I'm trying to think of ways to have Bitcoin keep its value, instead of always fluctuating up and down.  As far as I know, it rises because lots of people buy coins, and once it hits a certain point, someone decides to sell a large amount, so the price drops a little bit, causing everyone else to sell, dropping the price lots.  It falls down, until it hits a low enough value that people wish to "buy back in", and then the price begins to rise again, and the cycle repeats.

My idea is that instead of waiting for the price to rise to sell coins, wait for the price to rise to buy something with coins.  Go to coingig, or bitcoinstore, and find an item that you want, and tell yourself "When Bitcoin hits 120$ (or any price), I'm going to buy this item instead of selling to an exchange.".

I think that this would help keep the price stable, as well as distribute the coins more, instead of keeping them all locked up in an exchange.

EDIT::  My knowledge of economics is minimal, so I could be way off.

If you go to a store and use your bitcoins to buy something, the guy who just got them will dump them in the market, so the overall effect on the price is very small.

Just to be clear, there is a very small effect, since there is that 1 hour wait for confirmations before the other guy can dump them on the market, but like I said it is a very small effect.

Thats not 100% true. There are services/exchanges that will let you cash BTC without any confirmations

Right, so then instead of waiting 1 hour there is no waiting, so it makes even less impact on the price. Thanks for accentuating my point for me.

You're not clear on the velocity of the marketplace. At this moment in time, being able to convert to fiat instantly is NOT a good thing. You WANT people to stay in the world of BTC. BTC will never be a viable currency until people want to earn it, spend it AND hold on to it. Otherwise, its just a play thing that no one will take seriously. Besides, the trading is so thin right now that a couple of large purchases that are instantly put on Gox can have a widespread, negative effect. In my experience (keep in mind that I deal with some LARGE wallets) it can take as little as 100BTC to really affect the price. When I have 150+BTC to sell I take my time, usually at least 24 hours, sometimes more. 

Oh, I think I understand about velocity. The higher the velocity, the lower the price can go. I am just saying that we have very high velocity, so it does not matter if you sell your bitcoins for fiat or if you buy something and that guy sells the bitcoins for fiat, the effect is the same. There is not much we can do about it either, unless you have several million dollars lying around to hold the price steady yourself.

[AliceWonder]

I'm trying to think of ways to have Bitcoin keep its value, instead of always fluctuating up and down.  As far as I know, it rises because lots of people buy coins, and once it hits a certain point, someone decides to sell a large amount, so the price drops a little bit, causing everyone else to sell, dropping the price lots.  It falls down, until it hits a low enough value that people wish to "buy back in", and then the price begins to rise again, and the cycle repeats.

My idea is that instead of waiting for the price to rise to sell coins, wait for the price to rise to buy something with coins.  Go to coingig, or bitcoinstore, and find an item that you want, and tell yourself "When Bitcoin hits 120$ (or any price), I'm going to buy this item instead of selling to an exchange.".

I think that this would help keep the price stable, as well as distribute the coins more, instead of keeping them all locked up in an exchange.

EDIT::  My knowledge of economics is minimal, so I could be way off.

If you go to a store and use your bitcoins to buy something, the guy who just got them will dump them in the market, so the overall effect on the price is very small.

Yes and no.
The guy at the store very well may dump some of them. He also may save some of them (I have a paper wallet that 5% of all bitcoin gross will be going to) and he very well may spend some of them. Retail is a sh*tty job, that mary jane comes in handy.

Point is that bitcoin will be circulating and the more bitcoin circulates the more legitimate it looks to those who are on the fence.

First time I looked at bitcoin was several years ago, it looked like geek play money, I didn't see how it had any utility whatsoever. Something for the nerds at the Star Trek convention to keep their mind away from the fact that they weren't ever getting laid.

Now it looks to me like it actually has some utility.

As more people give it a second look, having the currency in circulation buying stuff helps it build legitimacy and that brings in buyers and buyers keep the price up.

[justusranvier]

You're not clear on the velocity of the marketplace. At this moment in time, being able to convert to fiat instantly is NOT a good thing. You WANT people to stay in the world of BTC. BTC will never be a viable currency until people want to earn it, spend it AND hold on to it. Otherwise, its just a play thing that no one will take seriously. Besides, the trading is so thin right now that a couple of large purchases that are instantly put on Gox can have a widespread, negative effect. In my experience (keep in mind that I deal with some LARGE wallets) it can take as little as 100BTC to really affect the price. When I have 150+BTC to sell I take my time, usually at least 24 hours, sometimes more.

Yes, we want people to stay in BTC, but paradoxically the way to do that is to make it as easy as possible to instantly convert to fiat.

Increased BTC->fiat liquidity makes people feel more comfortable holding bitcoins, so they'll hold more of them. Whenever something happens that makes it more difficult to convert you see a price drop as large holders run for the exits out of fear of becoming illiquid.

[AndreasMet]

Is it not the case that the reason most currency fluctuations are relatively small lies in the fact that central banks are there for intervention.

I also believe the sheer money supply acts as a buffer itself for national currencies.

The bit coin money supply is too small, and there is also concentration (some big holders), so I would expect volatility for quite a while.  When I look at Mt. Gox daily volume it's a tiny amount.

Wider acceptance can help smooth things out.

Also, the fact that arbitrage opportunities exist is indicative of a market where information is not flowing smoothly enough.

I would be interested in the total number of wallets in existence, and how that is trending over time.

At the present time, the people who can unload large amounts of coins are really the ones who have the biggest impact on price--not average joe shmoe like me

That's my 2 cents.

[halfawake]

if people would sell their coins in smaller portions instead of dumping them all at once they would get more $ for their coins and the market wouldnt take a dive. but maybe they want to create panic selling to buy back lower.

This is one of the smartest things I've read on these boards. I know this because I practice this too. I have had very frequent situations where I'm selling 150+ BTC at one time. This is A LOT harder than it sounds. Fortunately, I have a business and finance background that has given me some trading skills and I'm comfortable doing this (I also have multiple exchanges besides Gox to use). I'm TERRIFIED at the thought of these ASIC users with zero trading experience going on Gox on trying to sell their BTC in large chunks. They can completely collapse the market without even knowing it. Its like a baby crawling in a dark room putting their fingers in things - "let me see what happens when I plug into this socket . . . "

Hey, if you're a believer in bitcoin, just consider this a buying opportunity.  The price will recover eventually and you'll get your bitcoins a lot cheaper when these guys are dumping mined coins on the market.  Their inexperience is our gain.

[Diamondstarfall]

if people would sell their coins in smaller portions instead of dumping them all at once they would get more $ for their coins and the market wouldnt take a dive. but maybe they want to create panic selling to buy back lower.

This is one of the smartest things I've read on these boards. I know this because I practice this too. I have had very frequent situations where I'm selling 150+ BTC at one time. This is A LOT harder than it sounds. Fortunately, I have a business and finance background that has given me some trading skills and I'm comfortable doing this (I also have multiple exchanges besides Gox to use). I'm TERRIFIED at the thought of these ASIC users with zero trading experience going on Gox on trying to sell their BTC in large chunks. They can completely collapse the market without even knowing it. Its like a baby crawling in a dark room putting their fingers in things - "let me see what happens when I plug into this socket . . . "

Hey, if you're a believer in bitcoin, just consider this a buying opportunity.  The price will recover eventually and you'll get your bitcoins a lot cheaper when these guys are dumping mined coins on the market.  Their inexperience is our gain.

I've been happily buying bitcoins at these low prices the past week. Honestly I don't even day trade etc much anymore. I just really do enjoying using bitcoin now for online transactions.

[johnyj]

Given average daily volume of 50000 bitcoin, you need only a couple of million dollars to hold the price above 100, not a big deal for institutional traders. Exchange price usually is a consensus, and for bitcoin the consensus is that the value will rise sooner or later due to limited supply

The mobile payment is the future, since in mobile payment you need to convert money, that step is always needed, so bitcoin is no different than any other mobile payment solution, and it has super low fee

[Galahad]

My reason for buying Bitcoins is that if it becomes the world currency I will have some and they will be worth a lot. I'm not interested in games and playing the market. Buy as many as you can afford or afford to loose and then leave them.

[brooksby]

if people would sell their coins in smaller portions instead of dumping them all at once they would get more $ for their coins and the market wouldnt take a dive. but maybe they want to create panic selling to buy back lower.

This is one of the smartest things I've read on these boards. I know this because I practice this too. I have had very frequent situations where I'm selling 150+ BTC at one time. This is A LOT harder than it sounds. Fortunately, I have a business and finance background that has given me some trading skills and I'm comfortable doing this (I also have multiple exchanges besides Gox to use). I'm TERRIFIED at the thought of these ASIC users with zero trading experience going on Gox on trying to sell their BTC in large chunks. They can completely collapse the market without even knowing it. Its like a baby crawling in a dark room putting their fingers in things - "let me see what happens when I plug into this socket . . . "

Everything goes up and down in value... gold, stocks, oil, fiat currencies, etc.  Price is not really something that we should try to control in a free market.  Bitcoin is just very young and is still thinly traded compared to other markets.  It will continue to have large swings up and down until its trading volume goes up 100 fold or so.  Even then it will vary, just not as much.  So use the down swings to buy more.

[justusranvier]

I'm TERRIFIED at the thought of these ASIC users with zero trading experience going on Gox on trying to sell their BTC in large chunks. They can completely collapse the market without even knowing it.

If you're that worried about it then wire some dollars over to Mt Gox and be ready to buy up cheap coins when it happens.

[TheButterZone]

It seems like every time I think of buying something with BTC, the price drops, so I end up paying more.

[halfawake]

It seems like every time I think of buying something with BTC, the price drops, so I end up paying more.

Given the wild swings of bitcoin prices, I really think any merchant worth his or her salt would peg the prices to the exchange rates so that customers aren't screwed over when it changes.

[msweb]

Haven't read all the replies. But here is where the idea of 'buying something nice instead' fails. We are still not at the point where a business can function without any fiat money at all. Imagine the business that is taking your Bitcoins needs to cover their costs with USD (or similar) and is likely forced to sell some or even all of the coins through exchanges. That leads to the same effect in having a prize drop. It might be worse because they don't care about the maybe already low prize, they just want to get their costs covered with almost no risk. This could lead to a much worse prize drop. I'm not saying all the business will do it, but I think most of 'em will.

[TheButterZone]

It seems like every time I think of buying something with BTC, the price drops, so I end up paying more.

Given the wild swings of bitcoin prices, I really think any merchant worth his or her salt would peg the prices to the exchange rates so that customers aren't screwed over when it changes.

Doesn't matter. Example:
Buy 1 BTC at $100. Hold. Buy 0.25 BTC for $25. Find item for sale that has its price pegged to $125, but by that time the exchange rate had dropped, so the 1.25 BTC is insufficient. The $125 peg requires, for example, the purchase of 0.10 more BTC for $9.26 (assuming you buy at spot, no fee). In the end you will have to spend $134.26 to buy a $125 item.

I see this happening to other people all the time... "I came up short, need to buy 0.xx BTC to make up the difference because of the rate drop", paraphrased.

Murphy's law at work.