Lets talk BTC price over the next few months (downward move imminent?)

[spiral_mind]

There's several factors that will likely effect the price of Bitcoin in the near future.


The massive rate of increase of hashing power has made blocks be confirmed much faster than normal

Normal rate of block creation is one per 10 minutes. That means 3600 new Bitcoins are created per day normally, equalling about $400,000 per day at current prices.

With blocks being made much faster than that this source of new Bitcoins could drive prices down.

Likely effect on price:down


On the other side, difficulty rising means more $$ must be spent to mine each Bitcoin

Consider a Bitfury miner, one of the most cost efficient miners that can be purchased right now. http://mining.thegenesisblock.com/a/576b0ab173

If they deliver in october as expected buyers will not make a return on their investment at current prices.

The story is much the same for every other asic manufacturer (run the numbers yourself if you don't believe me).

Miners are going to have to hold onto their coins until the price rises to make a profit. However at least some of them are going to need to sell Bitcoins right away to pay their bills, so this likely will only reduce the rate of inflation caused by increased supply (rather than driving the price up)

Likely effect on price: up


Potential ending of quantitative easing by the federal reserve

See: http://www.bloomberg.com/news/2013-08-21/fomc-minutes-show-broad-support-for-bernanke-tapering-timeline.html

Quantitative easing is believed to have an upward effect on the price of gold because QE reduces public confidence in the dollar holding value. Ending QE will likely reduce demand for gold and other alternatives to the dollar.

http://www.forbes.com/sites/kitconews/2013/06/18/tds-eventual-qe-tapering-to-hurt-gold-potential-for-short-covering-into-september/

Higher confidence in the dollar holding its value means less demand for hedges like gold and Bitcoin.

Likely effect on price:down





I have to conclude the trend over the next few months will be downward. These definitely aren't the only variables that effect Bitcoin. I'm just trying to wrap my head around what the next few months will look like. If you've got any other suggestions for relevant factors please share.

[Birdy]

The massive rate of increase of hashing power has made blocks be confirmed about 2x as fast as normal lately.

Normal rate of block creation is one per 10 minutes. That means 3600 new Bitcoins are created per day normally, equalling about $400,000 per day at current prices. In reality there are likely close to $800,000 of Bitcoin being created each day.

With blocks being made twice as fast this source of new Bitcoins could drive prices down.

Likely effect on price:down

Afaik the difficulty increases are about 30% right now, that's still massive but not a 100% increase.
(and it will also mean the reward halving is going to be earlier, but okey that's still a while)

[spiral_mind]

The massive rate of increase of hashing power has made blocks be confirmed about 2x as fast as normal lately.

Normal rate of block creation is one per 10 minutes. That means 3600 new Bitcoins are created per day normally, equalling about $400,000 per day at current prices. In reality there are likely close to $800,000 of Bitcoin being created each day.

With blocks being made twice as fast this source of new Bitcoins could drive prices down.

Likely effect on price:down

Afaik the difficulty increases are about 30% right now, that's still massive but not a 100% increase.
(and it will also mean the reward halving is going to be earlier, but okey that's still a while)

Ah yeah good point thanks. I was going off of TheGenesisBlock article that mentioned blocks being made every 5 mins. The point is really there will be an increase in supply.

[Birdy]

We also have a Gox paradox:
People that want to sell their Bitcoins for dollars are increasing the Bitcoin price.

Here is why:
Gox delays dollar transactions, so people buy Bitcoins to sell them on other exchanges.
Normally that would result in a giant gap, but Gox is still leading the price for a lot of exchanges (although not as strong as before) and people buy more on other exchanges just because the price on Gox is rising.

Don't know how strong the effect is though ^^

[Ares]

We also have a Gox paradox:
People that want to sell their Bitcoins for dollars are increasing the Bitcoin price.

Here is why:
Gox delays dollar transactions, so people buy Bitcoins to sell them on other exchanges.
Normally that would result in a giant gap, but Gox is still leading the price for a lot of exchanges (although not as strong as before) and people buy more on other exchanges just because the price on Gox is rising.

Don't know how strong the effect is though ^^

People also can't get their money INTO gox, so I think the two counter eachother, if not making an uptrend more likely (lots of great news and exposure recently, meaning lots of people who may want to get in)


Above all of this, officials from all over the US government are meeting tomorrow to discuss Bitcoin with the Bitcoin Foundation, then congressmen on Tuesday. The result of the whole US regulation ordeal will ultimately determine the price movement IMO. It's been the elephant in the room since Bitcoin's inception.

[johnyj]

Difficult to say, there are many other factors

* Demand for bitcoin might rise, because the rising difficulty will cause lots of investors to put more money in exchange instead of mining rigs. At 30% jump per each difficulty change, it is much cheaper to buy coins directly (Currently 3 coins cost only $360, while $360 mining rigs won't mine 3 coins during its whole life span, even start to run today)

* Supply for bitcoin might drop due to less and less bitcoin income per miner (mass distribution of ASIC devices). If there are 360 miners each mining 10 coins per day, and each of them will sell 5 coins per day, that will be 1800 coins for sell. But if there are 36000 miners each mining 0.1 coin per day, most likely they will hold the coins, instead of selling 0.05 coins per day

* FED might not be possible to end QE quickly,  since that will cause the bond bubble to collapse, which in turn put government at brink of default or austerity

* Government might need to let pension fund invest in bitcoin so that they can afford to pay those retirees

[Ray Anastasio]

Why do so many people assume miners HAVE to sell bitcoins right away to "pay bills"?

Why not assume the have other resources and can horde?

[Le Happy Merchant]

Potential ending of quantitative easing by the federal reserve

Likely effect on price:down

I feel that when QE cuts out an economic shitstorm of extreme proportions will reach land. In short, I disagree with your conclusion.

[spiral_mind]

Potential ending of quantitative easing by the federal reserve

Likely effect on price:down

I feel that when QE cuts out an economic shitstorm of extreme proportions will reach land. In short, I disagree with your conclusion.

I wouldn't assume that people would decide to buy bitcoin in an "economic shitstorm". That's different from a weak/strong dollar. You see it on this forum all the time: people saying "only invest what you can afford to lose". That's good advice since its very hard to actually spend Bitcoin at the moment on everyday living expenses. It seems likely that an "economic shitstorm" would actually make most people hesitant to invest in Bitcoin since they have less money they could lose comfortably.

* Demand for bitcoin might rise, because the rising difficulty will cause lots of investors to put more money in exchange instead of mining rigs. At 30% jump per each difficulty change, it is much cheaper to buy coins directly (Currently 3 coins cost only $360, while $360 mining rigs won't mine 3 coins during its whole life span, even start to run today)

This is actually a great point. Thanks for that. Does anyone know the total amount invested in ASICS? It'd be hard to gauge the amount of new investors that buy mining equipment but the amount spent on ASICS should be fairly easily quantifiable.

* Supply for bitcoin might drop due to less and less bitcoin income per miner (mass distribution of ASIC devices). If there are 360 miners each mining 10 coins per day, and each of them will sell 5 coins per day, that will be 1800 coins for sell. But if there are 36000 miners each mining 0.1 coin per day, most likely they will hold the coins, instead of selling 0.05 coins per day

That's certainly possible but the majority of network speed was sold to big orders (look at the orderbook distribution on bfl.ptz.ro for example). These are people who are investing and want to make a return on their investment. That requires selling coins. Hopefully people with that much money to spend can afford to hold their Bitcoins for a while and don't have to sell to pay their electricity. But BFL has delayed over a year for lots of early orderers who thought they would be getting a money printing machine and become filthy rich long long ago.

[Tzupy]

The analysis you wrote in the first post is believable, but these factors will affect the price on long term,
while the title says 'downward move imminent'. While it is imminent, it has little to do with the 3 factors
you mentioned. It's about demand, supply and market sentiment (mostly bullish now, but changing).
It takes several days for the panic buyers (who bought and held in the 120 - 125 range) to convert into panic sellers,
but we'll see this happen very soon. The unknown (to me) is the size of the upcoming drop.
For the median term, it's way too early to tell how much speculator money (fiat) will stay on Gox, and that sets the trend.

[600watt]

some good points stated here, but let us not forget:


btc vs $:

2009: + 4867 %
2010: + 387 %
2011: + 1320 %
2012: + 170 %
2013: + 1000 % ?
2014: + ??


THAT is a strong trend. why should it stop in 2013 ? whatever made it rise will keep doing so for a while. 

[johnyj]

* Supply for bitcoin might drop due to less and less bitcoin income per miner (mass distribution of ASIC devices). If there are 360 miners each mining 10 coins per day, and each of them will sell 5 coins per day, that will be 1800 coins for sell. But if there are 36000 miners each mining 0.1 coin per day, most likely they will hold the coins, instead of selling 0.05 coins per day

That's certainly possible but the majority of network speed was sold to big orders (look at the orderbook distribution on bfl.ptz.ro for example). These are people who are investing and want to make a return on their investment. That requires selling coins. Hopefully people with that much money to spend can afford to hold their Bitcoins for a while and don't have to sell to pay their electricity. But BFL has delayed over a year for lots of early orderers who thought they would be getting a money printing machine and become filthy rich long long ago.

The competition is getting harder every day. In GPU mining era, you could easily spot some large miner with more than 40 mining rigs, over 100G hash power, they received 50 coins per day at a cost of huge electricity bill. Today, same power can run 40 ASIC rigs, but that will only get you 20 coins per day, and the income is dropping quickly. The initial investment in ASIC rigs are much higher than GPU miners,  and if they don't hold on to their coins and wait for a price rally, they will never make it back

[Stephen Gornick]

Why do so many people assume miners HAVE to sell bitcoins right away to "pay bills"?

Why not assume the have other resources and can horde?

That's likely due to the situation when mining was for GPUs and the Bitcoin revenues dropped to where they barely matched the increase in the electricity bill.    There was a high level of whinging (e.g., October and November 2011) by those who felt they "got suckered" into buying hardware (which is kind of true, since much press from May, June and July 2011 touted how miners were making huge bank.  These were not crypto-currency enthusiasts, they were techies who saw their friends getting "free hardware" and they jumped in -- oftentimes maxing out the credit card to do so.   So many of them truly were selling most every coin they mined and used the proceeds for paying off the purchase of the hardware and for the electric bill.  So then, of course, when difficulty rose it took more and more bitcoins, which collectively pushed the exchange rate lower ... incenting further spending, and spiraling on and on further down it went.

The miners who bought ASICs had to pay the cost up front so there's little additional cost to operating ASIC hardware yet (relative to BTCs earned), and thus more miners are today saving their coins than when comparing to 2011 when that sell-everything-you-earn behavior was prevalent.

[viboracecata]

some good points stated here, but let us not forget:


btc vs $:

2009: + 4867 %
2010: + 387 %
2011: + 1320 %
2012: + 170 %
2013: + 1000 % ?
2014: + ??


THAT is a strong trend. why should it stop in 2013 ? whatever made it rise will keep doing so for a while. 

It's meaningless, the down trend is most possible according to current bubble.

[dave111223]

Seeing as almost no mining devices will reach BTC ROI at the moment, then I think most miners will hold their BTC and await for them to appreciate, so at least they can make a fiat ROI (assuming the price will rise).

Buying mining equipment with BTC, then selling the mined BTC for fiat makes no sense given the current price and difficulty factors

[erk]

BTC/USD just hit $131.88 on Gox, that's the highest it's been in ages, what's going on there?

[viboracecata]

BTC/USD just hit $131.88 on Gox, that's the highest it's been in ages, what's going on there?

Hadn't you seen the peak $266?

[BlockChains]

BTC/USD just hit $131.88 on Gox, that's the highest it's been in ages, what's going on there?

Probably related to the meeting in Washington today between bitcoin players and government folk. Not necessarily good. If its something like gox getting "shut down" then big insiders would still buy up to get the coins out.

So the results aren't public but insiders know things now.

[Ares]

BTC/USD just hit $131.88 on Gox, that's the highest it's been in ages, what's going on there?

Hadn't you seen the peak $266?

this is the internet. a few months = a couple thousand IRL years.

[600watt]

some good points stated here, but let us not forget:


btc vs $:

2009: + 4867 %
2010: + 387 %
2011: + 1320 %
2012: + 170 %
2013: + 1000 % ?
2014: + ??


THAT is a strong trend. why should it stop in 2013 ? whatever made it rise will keep doing so for a while. 

It's meaningless, the down trend is most possible according to current bubble.

downtrend. ok, i keep watching this downtrend.