Recent decline?

[Loredo]

Check out the historical chart at http://bitcoin.clarkmoody.com/ (put the time frame on D1).  Aside from the parabolic run up into the USD 200's, the level of 100 seems to be, for now, a new baseline valuation.

When markets don't know what things are fundamentally worth, they tend to trade around "round numbers."  Currently 1BTC = 1 Barrel of oil, approximately.

hmmm interesting...not saying that 1 btc should equate to a barrel of oil, but would like to see the cost of mining one btc compared to the cost of drilling for one barrel of oil.

of course the costs of mining one btc cannot be broken down like that and the costs of producing one barrel of oil cannot actually be determined what with all the government intervention in oil markets...but it would be a good thought experiment nonetheless.

Seriously, it's likely coincidental.  Arguably thye major forces holding oil in the USD 80 - 100 trading range are, on the top, the effect that $4 gasoline has on US demand, forming a cap, and on the bottom, the cost of US fracked oil, which will shut in below the production costs, in the 80s, forming a floor.

Most likely, IMO, the BTC trading range is formed by USD 100 as the floor, and EUR 100 (USD130 +/-) as the cap.

[ranlo]

Check out the historical chart at http://bitcoin.clarkmoody.com/ (put the time frame on D1).  Aside from the parabolic run up into the USD 200's, the level of 100 seems to be, for now, a new baseline valuation.

When markets don't know what things are fundamentally worth, they tend to trade around "round numbers."  Currently 1BTC = 1 Barrel of oil, approximately.

hmmm interesting...not saying that 1 btc should equate to a barrel of oil, but would like to see the cost of mining one btc compared to the cost of drilling for one barrel of oil.

of course the costs of mining one btc cannot be broken down like that and the costs of producing one barrel of oil cannot actually be determined what with all the government intervention in oil markets...but it would be a good thought experiment nonetheless.

You mean basically seeing which one is more profitable? I've got to think that oil would be, just because while the barrel of oil may be $100 or whatever, the cost once it's been refined has a much higher profit margin.

[Loredo]

Check out the historical chart at http://bitcoin.clarkmoody.com/ (put the time frame on D1).  Aside from the parabolic run up into the USD 200's, the level of 100 seems to be, for now, a new baseline valuation.

When markets don't know what things are fundamentally worth, they tend to trade around "round numbers."  Currently 1BTC = 1 Barrel of oil, approximately.

hmmm interesting...not saying that 1 btc should equate to a barrel of oil, but would like to see the cost of mining one btc compared to the cost of drilling for one barrel of oil.

of course the costs of mining one btc cannot be broken down like that and the costs of producing one barrel of oil cannot actually be determined what with all the government intervention in oil markets...but it would be a good thought experiment nonetheless.

You mean basically seeing which one is more profitable? I've got to think that oil would be, just because while the barrel of oil may be $100 or whatever, the cost once it's been refined has a much higher profit margin.

I don't think a currency's exchange rate can be meaningfully compared to the price of a commodity.  The barrel of oil has defined value as the derived products' utility is consumed.  But a USD/BTC rate of $100 doesn't imply that a BTC provides or "produces" USD 100 of goods or services.

[ranlo]

Check out the historical chart at http://bitcoin.clarkmoody.com/ (put the time frame on D1).  Aside from the parabolic run up into the USD 200's, the level of 100 seems to be, for now, a new baseline valuation.

When markets don't know what things are fundamentally worth, they tend to trade around "round numbers."  Currently 1BTC = 1 Barrel of oil, approximately.

hmmm interesting...not saying that 1 btc should equate to a barrel of oil, but would like to see the cost of mining one btc compared to the cost of drilling for one barrel of oil.

of course the costs of mining one btc cannot be broken down like that and the costs of producing one barrel of oil cannot actually be determined what with all the government intervention in oil markets...but it would be a good thought experiment nonetheless.

You mean basically seeing which one is more profitable? I've got to think that oil would be, just because while the barrel of oil may be $100 or whatever, the cost once it's been refined has a much higher profit margin.

I don't think a currency's exchange rate can be meaningfully compared to the price of a commodity.  The barrel of oil has defined value as the derived products' utility is consumed.  But a USD/BTC rate of $100 doesn't imply that a BTC provides or "produces" USD 100 of goods or services.

mmm, I see what you mean. The concept of virtual vs. actual, or the fact that while oil has a true usability (in that it runs vehicles and such) BTC has an inferred value, in that it is only useful for trade.

[Loredo]

Check out the historical chart at http://bitcoin.clarkmoody.com/ (put the time frame on D1).  Aside from the parabolic run up into the USD 200's, the level of 100 seems to be, for now, a new baseline valuation.

When markets don't know what things are fundamentally worth, they tend to trade around "round numbers."  Currently 1BTC = 1 Barrel of oil, approximately.

hmmm interesting...not saying that 1 btc should equate to a barrel of oil, but would like to see the cost of mining one btc compared to the cost of drilling for one barrel of oil.

of course the costs of mining one btc cannot be broken down like that and the costs of producing one barrel of oil cannot actually be determined what with all the government intervention in oil markets...but it would be a good thought experiment nonetheless.

You mean basically seeing which one is more profitable? I've got to think that oil would be, just because while the barrel of oil may be $100 or whatever, the cost once it's been refined has a much higher profit margin.

I don't think a currency's exchange rate can be meaningfully compared to the price of a commodity.  The barrel of oil has defined value as the derived products' utility is consumed.  But a USD/BTC rate of $100 doesn't imply that a BTC provides or "produces" USD 100 of goods or services.

mmm, I see what you mean. The concept of virtual vs. actual, or the fact that while oil has a true usability (in that it runs vehicles and such) BTC has an inferred value, in that it is only useful for trade.

Exactly.  And in BTC's case, since it doesn' have the power of a sovereign behind it (which can cram down a currency on people by decree) the exchange rate has a element of risk still ("can I use it where I need to buy?" "how are others defining the exchange rate?" "will it be declared illegal by my government?" on and on.)

Hence, huge volatility. 

[pistachiotuque]

@galahad: low post count is artificial, some of us have lurked for a long time and only participate glancingly with the forum but read through from time to time.

I don't like newbie jail, but i dont like spammers either, so posting to threads I go, solving that very problem for my own account.

The analysis above was spot on, media cycle is down so miners that sell immediately are putting downward pressure on price. But tons more miner capacity is coming online soon, as we are in a paradigm shift going on right now in the migration to ASIC based mining equipment. So those who both mine and sell will likely fluctuate quite a bit in the upcoming timeframe. Get ready for volatility.

[simplemachine]

I also saw this and wondered why bitcoins lost so much value in a day or two.

[ranlo]

I also saw this and wondered why bitcoins lost so much value in a day or two.

It will bounce back. It always has. BTC is still fairly new in terms of mass adoption so it's finding its place.

[tabnloz]

Sorry tabnloz, don't know what's got into me lately.

It's all good.....stimulated a bit of debate anyway.

[esenminer]

It may be coincidental but BFL has started shipping increasing difficulty even more. Maybe miners who don't want to move into asics or alt coins are selling their coins forcing price down.

[PeterB]

I think the two main reasons are that quite some ways to get money into Bitcoin from the USA have been stopped (+some Fincen news that they discuss Bitcoin) and someone with a lot of Btc decided to dump them into the market.

Other than that we had good news only.

+1 I think the lack of ways for Americans to buy bitcoins is really slowing things in the short term. 

[ranlo]

It may be coincidental but BFL has started shipping increasing difficulty even more. Maybe miners who don't want to move into asics or alt coins are selling their coins forcing price down.

It's coincidental. The opposite is what should happen under normal circumstances (supply goes down and can't meet demand, so price goes up).

[esenminer]

It may be coincidental but BFL has started shipping increasing difficulty even more. Maybe miners who don't want to move into asics or alt coins are selling their coins forcing price down.

It's coincidental. The opposite is what should happen under normal circumstances (supply goes down and can't meet demand, so price goes up).

The mining supply of Bitcoins is constant as difficulty compensates for increase in network hashrate.

My thought was that miners who can't / don't want to continue mining because of asics are getting out while the price is high. They are selling, increasing the supply of bitcoins forcing price down. Or maybe just general uncertainty of what's going to happen when all the asics come online.

[ranlo]

It may be coincidental but BFL has started shipping increasing difficulty even more. Maybe miners who don't want to move into asics or alt coins are selling their coins forcing price down.

It's coincidental. The opposite is what should happen under normal circumstances (supply goes down and can't meet demand, so price goes up).

The mining supply of Bitcoins is constant as difficulty compensates for increase in network hashrate.

My thought was that miners who can't / don't want to continue mining because of asics are getting out while the price is high. They are selling, increasing the supply of bitcoins forcing price down. Or maybe just general uncertainty of what's going to happen when all the asics come online.

The supply, in the general sense, is constant. However those with the highest hash rates are undoubtedly holding on to their coins. It's the people with lesser hash rates that usually spend theirs. This means that more coins are ending up being held by a small subset of people, lowering the supply to everyone else. In a sense, you can view it as the "1%" situation.

[esenminer]

It may be coincidental but BFL has started shipping increasing difficulty even more. Maybe miners who don't want to move into asics or alt coins are selling their coins forcing price down.

It's coincidental. The opposite is what should happen under normal circumstances (supply goes down and can't meet demand, so price goes up).

The mining supply of Bitcoins is constant as difficulty compensates for increase in network hashrate.

My thought was that miners who can't / don't want to continue mining because of asics are getting out while the price is high. They are selling, increasing the supply of bitcoins forcing price down. Or maybe just general uncertainty of what's going to happen when all the asics come online.

The supply, in the general sense, is constant. However those with the highest hash rates are undoubtedly holding on to their coins. It's the people with lesser hash rates that usually spend theirs. This means that more coins are ending up being held by a small subset of people, lowering the supply to everyone else. In a sense, you can view it as the "1%" situation.

I agree with that. However in the short term the price dropping means somebody or some group of people suddenly decided to unload a substantial amount of Bitcoin. Assuming that this is not some large holder dumping a bunch of coins to purposely lower price isn't it feasible that the BFL asics shipping triggered some sort of sell off from existing GPU miners who were just hanging on until asics shipped?

It was only a passing thought as I've, and I'm sure most of us, have been following BFL for a while now and they've only started shipping in quantities in the last 2-3 weeks.

[ranlo]

I agree with that. However in the short term the price dropping means somebody or some group of people suddenly decided to unload a substantial amount of Bitcoin. Assuming that this is not some large holder dumping a bunch of coins to purposely lower price isn't it feasible that the BFL asics shipping triggered some sort of sell off from existing GPU miners who were just hanging on until asics shipped?

It was only a passing thought as I've, and I'm sure most of us, have been following BFL for a while now and they've only started shipping in quantities in the last 2-3 weeks.

Mmm, this is a really hard one. While that is definitely a possibility, another idea I saw the other day (that I think is likely more plausible) is that it has to do with the recouping of funds used to purchase the asics. People have had their money out of their pocket for a year or more with absolutely nothing to show for it, so this could be their way of trying to get financially back up again.

Also, keep in mind that something we see (at least in games, but I think it should apply here?) is that if one person drops their price, by say 10%, someone else will as well. It turns into people undercutting each other, lowering the prices until someone (or a group) manages to buy the wall back up again.

[Xuesheng]

I absolutely agree. We should totally expect bc to be extremely volatile. Since we are so much at an investors stage and not yet at a currency stage it could easily fluctuate rapidly as normal panic/greed cycles go through their paces. Once it becomes more of an actual currency (accepted by a substantial number of businesses) the fluctuations will level out a bit.

[Loredo]

It turns into people undercutting each other, lowering the prices until someone (or a group) manages to buy the wall back up again.

Another thought experiment scenario.  What would happen if a significant proportion of the daily mined BTC (closer to 4000 than 3600 right now due to gaming the difference between difficulty and hash rate) were to be garnered by venture capitalists who really have no interest in holding BTC rather than USD, EUR, or JPY? 

YiFu mentioned the chance of this happening last month, the appearance of the Winkies in BTC suggests it, and, face it, there's a lot of Silicon Valley based VC's for whom the development of a simple task ASIC isn't a huge, new challenge.

[ranlo]

It turns into people undercutting each other, lowering the prices until someone (or a group) manages to buy the wall back up again.

Another thought experiment scenario.  What would happen if a significant proportion of the daily mined BTC (closer to 4000 than 3600 right now due to gaming the difference between difficulty and hash rate) were to be garnered by venture capitalists who really have no interest in holding BTC rather than USD, EUR, or JPY? 

YiFu mentioned the chance of this happening last month, the appearance of the Winkies in BTC suggests it, and, face it, there's a lot of Silicon Valley based VC's for whom the development of a simple task ASIC isn't a huge, new challenge.

If this were to happen, theoretically the price would start plummeting. This is UNLESS people were buying it up as fast as it was being put on the market (I'm thinking that wouldn't happen though). There is another side-effect of this, though, which is that the prices dropping like that causes panic and makes other people sell, driving the price down more (some won't do it out of panic, but to buy back at the lower price).

So what we would experience is a drop (in your scenario a pretty large one I think), followed by a slow incline.

[Loredo]

So what we would experience is a drop (in your scenario a pretty large one I think), followed by a slow incline.

That's what I think, too.  Which is why I think this period of time (the coming of the ASIC's) is the moment of truth for BTC.  If there was one mistake made in design, it was in choosing a crypto algorithm that was "too easy" in the sense of chip processes.