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Author Topic: Monthly average USD/bitcoin price & trend  (Read 116263 times)
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rpietila
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November 11, 2013, 09:09:55 PM
 #81

Nice graphs, thank you. But is there a reason you selected Mt.Gox opening as the starting point and reject the notion that bitcoin was trading OTC for 1.5 years at an essentially flat rate?
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BitchicksHusband
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November 11, 2013, 09:34:28 PM
 #82

https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdGhDN3FBWFptTlZTREN0cFkxZ3JHTnc

This spreadsheet is my attempt to fit a logistic function to
the bitcoin price history and thus predict its future.
See Wikipedia http://en.wikipedia.org/wiki/Logistic_function

Because the initial phase of the logistic curve is exponential, I
found that a wide variety of maximum bitcoin prices could
reasonably match the price history. What is interesting is that
the resulting family of curves revealed that the very rapid
growth of bitcoin prices will not last more than a few more
years.


I configured the calculations to accept a guess as to what the
maximum bitcoin price in $US will be. I tried four values from
$40000 to $5000000. For each maximum bitcoin price, I
manually adjusted the starting X value and adoption period so
that the logistic curve passed through the July 7 2010 price and
also passed through the November 11, 2013 price.

The resulting adoption periods range from 10.3 years for
the $40000 max price to 13.6 years for the $5000000 max
price. The logistic function becomes linear at the adoption
halfway point and then becomes exponentially decreasing.
In the case of a $1000000 bitcoin price, the exponential
growth stops in 2017.

Note that the logistic function is fit to the price curve and
models the behavior of speculators, not the underlying bitcoin
economy - which I suppose may take 20-30 years to become
fully adopted, e.g. replace precious metals and fiat currencies.
Likewise, even after full adoption, bitcoin prices will continue
to grow as the underlying bitcoin economy grows.

Here is the logistic price curve supposing that bitcoin reaches a maximum price of $1000000.
The Y axis is the Log 10 of the price.



So on these graphs, the right side represents:

1×10x where x is the number.

So:

6=$1,000,000
5=$100,000
4=$10,000
3=$1,000
2=$100
1=$10
0=$1
-1=$.10

1BitcHiCK1iRa6YVY6qDqC6M594RBYLNPo
SlipperySlope
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November 11, 2013, 09:43:58 PM
 #83

Nice graphs, thank you. But is there a reason you selected Mt.Gox opening as the starting point and reject the notion that bitcoin was trading OTC for 1.5 years at an essentially flat rate?

The reason is merely the convenience of the data series that I downloaded from bitcoincharts.com.

I would guess that changing the starting point would not change the conclusion much - that if indeed bitcoin prices can be modeled according to an innovation adoption logistic function, then the log growth of the past three years may continue for two to four more years before rapidly slowing down. My analysis, if correct, does not say much about what the maximum price might be, but it does say to hurry up and invest now if one's tactic is buy and hold.
kdrop22
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November 11, 2013, 10:28:48 PM
 #84


So on these graphs, the right side represents:

1×10x where x is the number.

So:

6=$1,000,000
5=$100,000
4=$10,000
3=$1,000
2=$100
1=$10
0=$1
-1=$.10

Yes that is correct, it is a log of the price on the Y axis.
BTC_GHD
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November 11, 2013, 11:30:06 PM
 #85

Ah, it's nice to see the growth of BTC. Got to love them!

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rpietila
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November 12, 2013, 11:36:50 AM
 #86

New datapoints used, see OP! Wink
dserrano5
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November 12, 2013, 11:38:48 AM
 #87

Could we have quarterly vertical lines? It's difficult to pinpoint the exact moment we "will" reach $1000 Wink.

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November 12, 2013, 11:43:02 AM
 #88

Could we have quarterly vertical lines? It's difficult to pinpoint the exact moment we "will" reach $1000 Wink.

Sure, since I am not the one doing the charts anyway Smiley

Currently it seems to be postponed until May 2014...

No seriously, the value of this analysis is to give you ideas on when we are ahead or behind the trend. Objectively, not based on handdrawings. For example, my decision to time the selling last September was stupid, since the trendline was so much behind that any downside was very unlikely. As I did not have imminent need for the money, I better had waited and sold for example now, as we are ahead the trend (and at triple the price!).
Zangelbert Bingledack
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November 12, 2013, 12:10:23 PM
 #89

In my understanding, number of bitcoin users now is only 350,000, less than a million at least.

When it reaches 100 million, we are still in early adopter phase in global scale.

It is very important to realize that all growth has its limits, and the limit for bitcoin growth is that it replaces all other liquid wealth. That would lead the purchasing power to be in several million$ range. A more conservative scenario, that of replacing gold, would put the price at $300k/BTC.

It's still at least a 1500-bagger Wink


Good brainwash - $300k is now "conservative" as Chamath estimated $0.5-$1M...  Grin

Hehe, and people on reddit call each other insane for predicting $1000 by 2014. lol. Some clearly haven't grasped the enormity of what is hitting them yet.

Totally. Did you see this post today? http://www.reddit.com/r/Bitcoin/comments/1qetkx/why_are_so_many_people_here_confident_that/
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November 12, 2013, 12:33:13 PM
 #90

Great graphs, rpietila, molecular, and SlipperySlope. I don't know how I missed this thread.

SlipperySlope's graph adds an interesting angle: that we will see mainstream adoption get into full-swing in around 2-4 years. Almost as fun as considering the price growth is considering where Bitcoin will be qualitatively at each order of magnitude.

Mainstream adoption of Bitcoin suggests a radically changed world...in 2-4 years. (Holy shit!)

Also, I have a question for everyone to consider. Suppose Bitcoin never became popular in China. Suppose all investment and adoption stayed limited to the US, Europe, and wherever else it had significant uptake through 2012. We'd still be using this same exponential chart, correct?

If so, wouldn't that mean the addition of China (and later other countries) will have to add an extra doubling or so? It wouldn't be much in the grand scheme of things since it only takes a few months to double anyway, but it might fast-forward the graph by a couple of months, and more or less abruptly starting recently, given the dramatic upsurge in action from China. I know this distracts greatly from the purity of the math here, but then again those additions aren't nothing.
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Stephen Reed


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November 12, 2013, 01:54:31 PM
 #91

SlipperySlope's graph adds an interesting angle: that we will see mainstream adoption get into full-swing in around 2-4 years. Almost as fun as considering the price growth is considering where Bitcoin will be qualitatively at each order of magnitude.

Mainstream adoption of Bitcoin suggests a radically changed world...in 2-4 years. (Holy shit!)

I believe that bitcoin speculation is way ahead of the underlying bitcoin economy. What will radically change in 2-4 years accordingly, is mainstream perceptions and expectations.

Quote
Also, I have a question for everyone to consider. Suppose Bitcoin never became popular in China. Suppose all investment and adoption stayed limited to the US, Europe, and wherever else it had significant uptake through 2012. We'd still be using this same exponential chart, correct?

The family of logistic curves I made, and the log growth chart presented by rpietila, probably do not change much if we leave off the last six months of data. The addition of China, and later other countries yield a higher maximum bitcoin price, extending the exponential phase of the logistic curve, not necessarily changing its slope.
rpietila
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November 12, 2013, 02:11:00 PM
 #92

I believe that bitcoin speculation is way ahead of the underlying bitcoin economy. What will radically change in 2-4 years accordingly, is mainstream perceptions and expectations.

That is the role of speculation. Bitcoin is still world's most undervalued investment. The exponential value appreciation phase will last until bitcoin's price is on the same ballpark as its future value (not present value).

I think even $10,000 bitcoins now are very affordable. Future looks much brighter than in March when I estimated the fair price as $2200.

You miss the gains if you base your estimates on what is available now. It is possible that bitcoin bubble will consummate at about the same time as the early adoption turns into mass adoption. So it was with Internet and Internet stocks in 1999.
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November 12, 2013, 02:11:18 PM
 #93

Nice graph!

Thanks

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November 12, 2013, 03:09:41 PM
 #94

Great thread. Thanks to all the participants. Is the first post being updated to reflect OP's current thoughts/data?
just trying to identify the "latest info"
rpietila
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November 12, 2013, 03:38:07 PM
 #95

Yes, the most recent changes to the OP were from today:

- dree12's data used (more accurate volume weighting, did not change a lot)
- as a result, redrawn trendline with equation: y = 0,092x - 2,9124 ;  R² = 0,91466 (x=1 <=> Jan2009).

Interesting thing is that the trendtargets were revised upwards a little. Despite this, the current price is higher than the trendtarget. It does not mean that you should sell or even abstain from buying. Care should be taken when the price significantly overshoots the target. The April high was 3.6x the target.

- If there is a rise to a high plateau above the trendline, the trendline will auto-correct higher + rise towards the price at 23% monthly pace.
- If there is an intermediate top, there will by definition be a correction below the trendline also, and this will be the premier entry point.

Trendtarget for Nov2013: 328
Trendtarget for Dec2013: 404
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November 12, 2013, 03:38:14 PM
 #96

The family of logistic curves I made, and the log growth chart presented by rpietila, probably do not change much if we leave off the last six months of data. The addition of China, and later other countries yield a higher maximum bitcoin price, extending the exponential phase of the logistic curve, not necessarily changing its slope.

Right, I forgot this wasn't the speculation subforum, but for spec purposes it seems to mean we can expect nearer-term prices to be pushed a few weeks or months to the right. That is, a bit higher price targets (maybe between 30% and 100% higher) than what the trend would otherwise predict for this time.
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November 12, 2013, 05:04:06 PM
 #97

I love this thread too. This where my mind has been for many months now, and it is great to see some better numbers being put on the long-term charts with better data (by better minds). Thank you.

Many of you have seen this before, but thought I would post so that new readers to this thread might have an understanding of some of the underlying terminology and theory for the longer-term adoption cycle.



and to give a sense of where we might be in this cycle and expected time-frames (now very early in the "trigger" phase):



I expect that the "inflated expectations" phase will correspond (closely, but not simultaneously) to the extreme peaks in valuation that rpietila has been hinting about. (Since all current pricing is based on expectations of future value). Followed by a collapse back to much lower valuations, followed by relative stabilization at the more sustainable 300K levels as massive adoption kicks in.

I wonder how you think this may align with Slippery's excellent analysis?


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November 12, 2013, 05:19:02 PM
 #98

Could we have quarterly vertical lines? It's difficult to pinpoint the exact moment we "will" reach $1000 Wink.

Sure, since I am not the one doing the charts anyway Smiley

Currently it seems to be postponed until May 2014...

No seriously, the value of this analysis is to give you ideas on when we are ahead or behind the trend. Objectively, not based on handdrawings. For example, my decision to time the selling last September was stupid, since the trendline was so much behind that any downside was very unlikely. As I did not have imminent need for the money, I better had waited and sold for example now, as we are ahead the trend (and at triple the price!).

Confused here Huh . The trendline shows that oct/nov price ise around 300 USD/BTC? You say you say that we are at triple over the trend price? I do not understand that part. Are you predicting that the price is gonna fall?
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November 12, 2013, 05:24:41 PM
 #99

He just meant triple the price from when he sold till now.
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November 12, 2013, 05:25:07 PM
 #100

I added a table to the results page of my shared spreadsheet. Given your own guess as to the maximum bitcoin price - by which I mean the price when bitcoin is fully adopted by financial speculators, the corresponding logistic adoption curve predicts these prices ...



You can view, and copy for your own editing, the bitcoin logistic spreadsheet here:
https://docs.google.com/spreadsheet/ccc?key=0ArD8rjI3DD1WdGhDN3FBWFptTlZTREN0cFkxZ3JHTnc

Four sheets are included: commentary, calculations, chart, and results. The calculations are performed using the $1000000 maximum price, but the parameters for the other three cases are in the results sheet.

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