Old Trend vs New Trend vs Unsustainable Bubble ??? + "6 Step Pattern Analysis"

[windjc]

Its either early or late majority and it depends on how much value bitcoin really has. I'm thinking late majority, otherwise the price would already be much higher. Too many wealthy people know about it to not have pushed the price in to the thousands, if it really belonged there.

I have coworkers and friends who have brought bitcoin up to me... 2 of them miners and one of them with an ASIC order. Those who I have talked to about it agree for the most part its a niche thing. Few want it, even less need it.

Lol@ saying we are in majority phase because some of your friends have heard about it. It's one thing to have heard about it, another to adopt it. The vast majority of the world has not heard of it. Fact.

You are way off. And extremely short sighted.

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[derpinheimer]

Its either early or late majority and it depends on how much value bitcoin really has. I'm thinking late majority, otherwise the price would already be much higher. Too many wealthy people know about it to not have pushed the price in to the thousands, if it really belonged there.

I have coworkers and friends who have brought bitcoin up to me... 2 of them miners and one of them with an ASIC order. Those who I have talked to about it agree for the most part its a niche thing. Few want it, even less need it.

If it's a niche thing that means we're definitely not in the majority phase yet. If it remains a niche then it simply won't reach the majority at all. This is a possibility ofcourse, but if it does reach out into the mainstream (majority) then the current value will seem like absolutely nothing.

its all relative. if only 0.01% of people in the world will ever use it, and the last person learned about it tomorrow, thats still a "laggard"

If only 0.01% of people in the world will ever use it that means that bitcoin has never been able to get passed the early adopter phase and the experiment simply failed.

Well according to that logic, we are nowhere on that graph, because its impossible to know the outcome. How about we have a version, "where are we on that chart, if price peaks $266?"

Dumb.

Its either early or late majority and it depends on how much value bitcoin really has. I'm thinking late majority, otherwise the price would already be much higher. Too many wealthy people know about it to not have pushed the price in to the thousands, if it really belonged there.

I have coworkers and friends who have brought bitcoin up to me... 2 of them miners and one of them with an ASIC order. Those who I have talked to about it agree for the most part its a niche thing. Few want it, even less need it.

Lol@ saying we are in majority phase because some of your friends have heard about it. It's one thing to have heard about it, another to adopt it. The vast majority of the world has not heard of it. Fact.

You are way off. And extremely short sighted.

Again, explain why the price is so low if its so set to take off. $200 isnt nearly enough for even a tiny economy.

[Valerian77]

If only 0.01% of people in the world will ever use it that means that bitcoin has never been able to get passed the early adopter phase and the experiment simply failed.

People in the world

that would be around 7.2 E 9   people in the world right now

0.01%  *   7.2 E 9   =   7.2 E 5   =    720000

0.01% of people in the world = 720000 people

I think that would not be enough. But let's see the population in the countries:

    China    1,388,372,481
    India    1,257,350,942
    USA       320,915,326
    Indonesia    250,871,292
    Brazil    200,932,589
    Pakistan    183,163,329
    Nigeria    175,288,575
    Bangladesh 157,249,610
    Russia    142,708,789
    Japan    127,094,048
    Mexico    122,833,076
    Philippines 98,975,005
    Ethiopia    94,922,297
    Vietnam    91,975,832
    Germany    82,700,785
    Egypt    82,510,756
    Iran       77,796,027
    Turkey    75,241,661
    Congo    68,144,637
    Thailand    67,082,643

I marked the important ones green. that would be:    4,243,284,569

I would expect that minimum 1 % would use BTC former or later  ~   42 Mio people

If each of them produces BTCGP (BTC Grand Product) equivalent to 100 EUR / year
then the fair price would be around 200 EUR   =    42 E 6  /  21 E 6  *  100

That would mean that we are near to the fair price and everything else is speculation. But there is space to play with the numbers eg. BTCGP = 2000 EUR   then   the fair price would be   4000 EUR

[Valerian77]

I marked the important ones green. that would be:    4,243,284,569

I would expect that minimum 1 % would use BTC former or later  ~   42 Mio people

If each of them produces BTCGP (BTC Grand Product) equivalent to 100 EUR / year
then the fair price would be around 200 EUR   =    42 E 6  /  21 E 6  *  100

That would mean that we are near to the fair price and everything else is speculation. But there is space to play with the numbers eg. BTCGP = 2000 EUR   then   the fair price would be   4000 EUR

Finally it should be clear that the price level is not a question of these kind of calculations but more of believe. That means that the mapping value:  1 BTC -> 200 €  is just based on the assumption that Bitcoiners use 1 BTC to trade their goods and services for that 200 €. Maybe in the future 30 % are lost and another 50% are saved somewhere in cold storages and never used then the price level would be much higher.

But the very important thing to say is: The long time value does not depend on speculation but primarily on the trading volume. For that it is very fundamental to create more everyday services being paid with BTC.

[Valerian77]

Second addition:

The previous calculation is fairly naive and does not consider companies etc to use Bitcoin either.


There are other ways to calculate the value. Eg. simply take the amount of M0 USD currently in circulation. That is   3.1 E12  USD. Then one can assume that 1 promille may be traded in Bitcoin.

3.1 E12   *   1 / 1000   = 3.1 E9

Since there are max 21 E6 BTC  the value of one Bitcoin would be:

3.1 E9  /  21 E6  =   147 USD    (pretty low, is it ?)


Or one can take the GSP of the USA 15.6 E12 USD and say 1 promille will be done in Bitcoin:

15.6 E12   *   1 / 1000   = 15.6 E9

that would be

15.6 E9  / 21 E6 =  743 USD    (looks better)


So finally there are limits to the value rise of Bitcoin. But since it is not limited to USA and 1 promille seems to be very low in a society where services are getting more and more important my expectation for the fair value is between 1E3 EUR and 1E4 EUR for one Bitcoin.

[Valerian77]

Third addition:

There is one more szenario not to forget. Bitcoin really proofs its capabilities and are widely accepted. 30% of the people in the important countries (that is 1.26E9) use Bitcoin and produce each one 1E4 USD each year. Then the calculation would be:

 1260E6  /  21E6  *  1E4   =   600000

That is 600000 USD for 1 BTC. Even if Bitcoin is very successful I would not expect this kind of szenario before most Bitcoins are mined. The next question would be how the market is shared over alt currencies.

[Valerian77]

Fourth addition:

There are other estimates like this one:
The Target Value For Bitcoin Is Not Some $50 Or $100. It Is $100,000 To $1,000,000. - Falkvinge on Infopolicy

My comment on that is:
 1. Nothing is impossible
 2. the range of 1E5 to 1E6 USD for 1 BTC is the order of magnitude of my most positive estimate (last posting)
 3. not to forget due to the fact that debt is not a concept in the Bitcoin universe the comparison to other currencies in FX markets might not work
 3. finally as in my own estimations none of the used parameters are fixed except the number of Bitcoins - every number is just a guess

But it is very interesting to see that two very independent estimates come to a comparible result for the long time value of Bitcoin which is in the same order of magnitude:   600000 USD   ~   $100,000 To $1,000,000   ---   on the other side 1E6 USD seems to be an upper limit (except USD goes into hyperinflation)

Without being a spoilsport I think we will end up in the range 1E3 to 1E4 USD for 1 BTC in the next years.

[windjc]

Its either early or late majority and it depends on how much value bitcoin really has. I'm thinking late majority, otherwise the price would already be much higher. Too many wealthy people know about it to not have pushed the price in to the thousands, if it really belonged there.

I have coworkers and friends who have brought bitcoin up to me... 2 of them miners and one of them with an ASIC order. Those who I have talked to about it agree for the most part its a niche thing. Few want it, even less need it.

If it's a niche thing that means we're definitely not in the majority phase yet. If it remains a niche then it simply won't reach the majority at all. This is a possibility ofcourse, but if it does reach out into the mainstream (majority) then the current value will seem like absolutely nothing.

its all relative. if only 0.01% of people in the world will ever use it, and the last person learned about it tomorrow, thats still a "laggard"

If only 0.01% of people in the world will ever use it that means that bitcoin has never been able to get passed the early adopter phase and the experiment simply failed.

Well according to that logic, we are nowhere on that graph, because its impossible to know the outcome. How about we have a version, "where are we on that chart, if price peaks $266?"

Dumb.

Its either early or late majority and it depends on how much value bitcoin really has. I'm thinking late majority, otherwise the price would already be much higher. Too many wealthy people know about it to not have pushed the price in to the thousands, if it really belonged there.

I have coworkers and friends who have brought bitcoin up to me... 2 of them miners and one of them with an ASIC order. Those who I have talked to about it agree for the most part its a niche thing. Few want it, even less need it.

Lol@ saying we are in majority phase because some of your friends have heard about it. It's one thing to have heard about it, another to adopt it. The vast majority of the world has not heard of it. Fact.

You are way off. And extremely short sighted.

Again, explain why the price is so low if its so set to take off. $200 isnt nearly enough for even a tiny economy.

Ummm....it's new. Easy of use applications haven't begun to develop. Eco system is infantile.  Exposure infantile.

ADDITION: I was on my cellphone stopped along a motorcycle ride when I wrote that short response.  But I have to add some obvious things there. First of all, Derp, you are completely misunderstanding that S-curve graph. This adoption is based on people integrating it into their lives, not about hearing about it on the news or something about bitcoins from a friend, etc. 

So we are at the early stages or early adopters. Not anywhere close to beyond that.

Think about your life Derp and technology just a little bit. In 1978 I went to the worlds fair as a young child and saw one of the first car cell phones.

It was over 2 decades later until cell phones were a viable option for most 1st world citizens.  So I new about them in 1978 and used them in 1998. This is typical of technology. I mean the internet is 20 years old and 20% of the US still doesn't have it or has some version of it that is so slow they can't use it.

Right now you are making the weakest possible case against bitcoin. You are basically arguing that it won't grow any more because it hasn't grown fast enough. Just think about what you are even saying here.

[BitchicksHusband]

Translation for my wife (and other people):

1E6 is computer programmer for 1×10⁶ or 1,000,000 (or 1 with 6 zeroes after it).

[podizzle]

good stuff

[Zangelbert Bingledack]

We are in innovators or maybe just starting to enter early adopters.

But to be more precise, we have to look at both the currency use of bitcoins and the investment use. In terms of currency use, we are still deep in the innovators phase. It's the part where there is pretty much no everyday use for the currency for the average person, just a very few niche uses - let's not kid ourselves here - but that doesn't mean these uses won't grow. But in terms of investment use, we are starting into the early adopters phase I think. We have forward-thinking non-technical people starting to buy in, whereas a year ago it was mostly extreme bleeding edge techies or radical libertarians (both types of innovators) buying in.

Since investment is always about anticipating other future uses (in this case currency, remittance, stock market, smart property, etc.), it will always be ahead on the adoption curve. They buy and hold in anticipation that Bitcoin will become the backbone of the financial internet. They are forward-looking in their vision but not innovators in that they don't necessarily want to deal with the currency aspect (they might once they get into it, but that's a side effect; the important thing is they bought for the investment, not in order to enable specific purchases).

See here for a better explanation of the early-adopting investor's role: http://www.reddit.com/r/Bitcoin/comments/1mb27q/bitcoins_vast_overvaluation_appears_caused_by/cc7i6y8

[dnaleor]

18 december is early this year

[Valerian77]

Fifth addition (to https://bitcointalk.org/index.php?topic=321720.msg3466206#msg3466206):

In my previous postings I assumed that any Bitcoin takes its value from good and services in circulation plus speculation. But over long time the speculation should go back annealing zero.

This is not the full story. finally the the point may be that the money amount to be mapped to Bitcoin may be much bigger than M0 US Dollar. E.g. people will start to trade assets with Bitcoin. Let's take Apple inc. with 934,8 Mio. stock papers each worth 526.75 $. That is a total of 492,4 Bil. $.

In the future we should be able to trade stock papers like Apple with Bitcoin. That alone would imply

   492,4 E9 USD   /   21 E14 BTC  = 22,585.7143  USD / BTC        i.e.     1 BTC = 22,586 USD

This example is limited to only Apple. But it shows one fundamental problem with legacy currencies (fiat) - the amount of money used is not M0. But with Bitcoin in the first order we just would have a M0 supply.

However his might be solved. It shows clearly the potential of Bitcoin beyond anything anything known from other assets.

[dnaleor]

I should update my chart. I do this in a couple of days.

It seems that the "new trend" is stronger than I expected. But nonetheless, we went through [1], [2] and now we are at [3] recovery.

[Cygnify]

Updated chart?

[XxionxX]

That would be great because this was a decent analysis.

[dnaleor]

Updated chart?

That would be great because this was a decent analysis.

thanks for bumping this thread, forgot to update in december.
I think we will see the "false signal" in the next couple of days... We will see a new strong uptrend towards 1000 USD (5)

After that, we will see a small crash event (orange arrow) and after that a consolidation towards 1000 USD (approximately) (6)
I guess we will see the start of a new "bubble phase" in march (green line)



This detailed chart should be added to this chart, but the lines are getting smaller and smaller, so I do not think it would be readable:

If the BTC will not jump in the next day or 2, I will call the recent drop from 233 USD towards 160 USD as the latest "Mild Crash EVent" and we are now oficially in Consolidation [6] until 18 december
I will then also update my chart

Price seems stable above $200. Its starting to become a psychological floor now. So you're right we are probably in "consolidation" until the next spike.

Update:

My prediction for the future:
There will be less volatility due to more (and rapid) adoption of bitcoin (more investment, less speculation). So we will see smaller bubbles.
The current 2013 bubble is much smaller than the 2011 bubble (smaller slope of the red lines and shorter lines).
If this trend continues, we will see at a certain point just stable (exponential) growth.

[pietje]

Updated chart?

That would be great because this was a decent analysis.

thanks for bumping this thread, forgot to update in december.
I think we will see the "false signal" in the next couple of days... We will see a new strong uptrend towards 1000 USD (5)

After that, we will see a small crash event (orange arrow) and after that a consolidation towards 1000 USD (approximately) (6)
I guess we will see the start of a new "bubble phase" in march (green line)



This detailed chart should be assed to this chart, but the lines are getting smaller and smaller, so I do not think it would be readable:

If the BTC will not jump in the next day or 2, I will call the recent drop from 233 USD towards 160 USD as the latest "Mild Crash EVent" and we are now oficially in Consolidation [6] until 18 december
I will then also update my chart

Price seems stable above $200. Its starting to become a psychological floor now. So you're right we are probably in "consolidation" until the next spike.

Update:

My prediction for the future:
There will be less volatility due to more (and rapid) adoption of bitcoin (more investment, less speculation). So we will see smaller bubbles.
The current 2013 bubble is much smaller than the 2011 bubble (smaller slope of the red lines and shorter lines).
If this trend continues, we will see at a certain point just stable (exponential) growth.

Looking awesome
And i like the term "stable exponential growth".