just hit 8 on mtgox

[shmadz]

am I reading this right? could we maybe go down to 5?

(I have heavy buy positions at 5, but sadly, not on mtgox, I don't expect the canadian exchange to go lower than 8 or 9, but I can always hope!

*edit* I guess I should mention, when I say "heavy" I mean half my portfolio... which is roughly $100 lol

[BTC Economist]

You should probably kill those buy positions.

[shmadz]

You should probably kill those buy positions.

really?

you think this is the death knell? I know stocks are in a bad spot and everyone is running to the dollar, perhaps gold and silver once markets open monday...

but I still expect BTC around 10 by the end of the year (at least)

*edit* just put some buys in going all the way down to 1, just in case 

[stsbrad]

You should probably kill those buy positions.

it's people like you that are killing bitcoin. you are fear mongering to sell a shitty product

[old_engineer]

At $7.80 on Mt. Gox now, the spread at Tradehill is crazy with bids for >200 coins at >$8 on tradehill, but no takers as of yet.  Arbitrage, anyone?

[Edward50]

These low prices are crazy awsome.

I do not really know how low it can possible go. Since I do want to buy in at the low, I am not sure how low bitcoins can actually go. I also missed out on buying large quantities of oil when I  speculated oil would fall down to $20 dollars, I was waiting for it to get close to that amount. It hit around $30 and went up from that point. I lost thousands by trying to buy it at the complete low. But I really thought it should be around $20 at the time based on historical costs.

But oil has a use and is much more vaulable than bitcoins. Personally I will just stay away from bitcoins as I really believe it is a bad investment with so many things going wrong for it to hold the price up so high. I would say it will drop to around $3.00-$5.00 for the low.

Maybe the best low will be the actual cost to mine a bitcoin.

[proudhon]

These low prices are crazy awsome.

I do not really know how low it can possible go. Since I do want to buy in at the low, I am not sure how low bitcoins can actually go. I also missed out on buying large quantities of oil when I  speculated oil would fall down to $20 dollars, I was waiting for it to get close to that amount. It hit around $30 and went up from that point. I lost thousands by trying to buy it at the complete low. But I really thought it should be around $20 at the time based on historical costs.

But oil has a use and is much more vaulable than bitcoins. Personally I will just stay away from bitcoins as I really believe it is a bad investment with so many things going wrong for it to hold the price up so high. I would say it will drop to around $3.00-$5.00 for the low.

Maybe the best low will be the actual cost to mine a bitcoin.

How low can it go?  Alllllll the way down.  Though, I'm somewhat sympathetic with your assessment of the $3-5 range.   I think that's where we'll brush up against miners' cost of productivity.  However, it's important to remember the hundreds of thousands (millions?) of coins people picked up for under $1.  Those coins could pull us below current miner productivity if those people want to go ahead and get a bunch of USD out over and above what they put in, which many of them could do at prices well below the cost of production.

[grod]

Maybe the best low will be the actual cost to mine a bitcoin.

If you factor in 50% hardware depreciation over 2 months we're there now at $7.70 assuming 14c/kwhr power and $1/gigahash hardware cost.  Those of us mining and building efficiently (read: $.56/gigahash, .6c/kwhr) are still profitable until $5 at 2 mil difficulty. 

Then again, profit is relative.  Is it worth risking hardware failure, extra heat and noise for $10/month per gigahash?  Yes for some, less so for others.

Add to the mix variable difficulty.  If difficulty decreases as Europeans and Hawaiians and others with power costs significantly over 14c/kwhr stop mining then the rest of us may be profitable at yet lower prices per BTC.

While there's been a slowing of difficulty growth over the past 4000 blocks or so I don't see difficulty going negative -- yet.  At $6/BTC that might start.  And a difficulty drop is when I start calling the pyramid on fire and running for the exit.

[Cluster2k]

However, it's important to remember the hundreds of thousands (millions?) of coins people picked up for under $1.  Those coins could pull us below current miner productivity if those people want to go ahead and get a bunch of USD out over and above what they put in, which many of them could do at prices well below the cost of production.

The above is a very important point to remember.  I have read many times on this forums claims that bitcoin's value cannot fall below production cost (about $4 to $8, today).  This nonsense of course, for the above reason.  The cost today is much higher than the cost 6 months ago, or 12 or 18.  Bitcoins were produced at cents per bitcoin at the beginning.  All these are still floating around.  If early adopters believe 'this is the last gasp' of bitcoin, watch out.

A wise word to investors: don't go throwing good money after bad. 

[grod]

A wise word to investors: don't go throwing good money after bad. 

Always good advice, but I believe your premise is wrong.  Bitcoins are valued by the demand side, NOT the supply side.  I can mine my own block chain for pennies, and yet those coins are likely worth even less.

What matters is the current cost to mint one but more importantly the demand for coins.  If someone wants bit coins their *current* choice is to mine or buy.   They can't get into a time machine and mine with a CPU back in 2009.  So, if the market cost is under power cost it definitely makes sense to buy, pegging price to power cost.

What you're talking about is saturating the demand with existing coins.  I admit, that could happen.  But if an early adopter didn't cash out at $10 to buy more hardware to recoup their investment they are probably not going to do so at $3.  In other words, IMO the lower the price goes the lower the odds of those 5+ million hoarded BTC hitting the market.  OTOH, all early adopters are kicking themselves for not having sold yet, so there is definitely a rock solid resistance level at several previous highs.  Including as low as $11.

[fastandfurious]

A wise word to investors: don't go throwing good money after bad. 

Always good advice, but I believe your premise is wrong.  Bitcoins are valued by the demand side, NOT the supply side.  I can mine my own block chain for pennies, and yet those coins are likely worth even less.

What matters is the current cost to mint one but more importantly the demand for coins.  If someone wants bit coins their *current* choice is to mine or buy.   They can't get into a time machine and mine with a CPU back in 2009.  So, if the market cost is under power cost it definitely makes sense to buy, pegging price to power cost.

What you're talking about is saturating the demand with existing coins.  I admit, that could happen.  But if an early adopter didn't cash out at $10 to buy more hardware to recoup their investment they are probably not going to do so at $3.  In other words, IMO the lower the price goes the lower the odds of those 5+ million hoarded BTC hitting the market.  OTOH, all early adopters are kicking themselves for not having sold yet, so there is definitely a rock solid resistance level at several previous highs.  Including as low as $11.

You are right to some degree, my trading experience from the "real world" of finance tells me that the two words greed and fear are always repeated. Even if the ones that hoarded millions together (early early adopters) didn't sell when we were 10 dollars +, it doesn't automatically mean that they wont sell at 5 dollars. That's because the "fear" part comes in and they get irrational. If that happens we could even see prices go as low as 2-3 dollars, but it's a big IF.

[Bitcoin Swami]

You should probably kill those buy positions.

it's people like you that are killing bitcoin. you are fear mongering to sell a shitty product

I wonder if anyone has bought his product. lol. 

[grod]

Anything could happen.  However, I don't see the motivation for an early adopter BTC panic unless there's reason to believe the pyramid is on fire.  IMO that isn't until difficulty starts dropping.  Difficulty dropping -> less interest in bitcoin -> lower odds of higher future payout -> sell at any price.  So long as difficulty is increasing the odds on a higher long term payout are on ignoring temporary price fluctuations.

These aren't panicky traders, these are engineers.  Temporary price movement while the long term trends stay intact are no big deal.  Changes in fundamentals, well, that is different.

[shmadz]

well, we just hit 8.0  - as of around 11AM MST *correction, first trade at 8.0 was at 10:32*- on the canadian exchange which usually lags quite a bit behind the mtgox... I'm a bit surprised that it actually followed this quickly, like only 3 or 4 hours behind?

I had a theory that the canadian exchange would be consistently lower because I had an assumption that there were more miners per capita in canada. just seems to be a lot of tech-savvy people here, but maybe that's just my local area. but also I've seen on this small little exchange that there has been normally a lot more sell positions (by volume) than buy positions, which supported my theory.

although on the one hand, I want to see stable prices to entice merchants to begin accepting bitcoin; on the other hand this market fluctuation is very exciting!

will be interesting to see where it goes from here.

[pennytrader]

Bitcoins are valued by the demand side, NOT the supply side.

First time I've ever heard that kind of statement. Price is always determined by both sides. Economy 101...

Of course, the total supply (current & future) is still limited (21m). The ultimate question is whether it can be adopted by the public. I don't have the crystal ball (I believe one noe does) so it's really hard to tell.

[NetTecture]

Bitcoins are valued by the demand side, NOT the supply side.

First time I've ever heard that kind of statement. Price is always determined by both sides. Economy 101...

Of course, the total supply (current & future) is still limited (21m). The ultimate question is whether it can be adopted by the public. I don't have the crystal ball (I believe one noe does) so it's really hard to tell.

No, economy 102 - simple rules dont always work.

There are some scenarios for example where "the profit is made by the purchase department" (getting goods cheap - because the sell price is HARD determined).

Bitcoins: Mining speed is constant. There is little fluctuations there, nothing to invest - people just hoard or spend (little). So, the price is determined by the demand side, as enough people seem to be willing to sell for whatever price people offer. Poor credit card funded miners now making a loss

[haploid23]

wow price is now 7.7 USD per BTC. looks like it's the trickle effect of panic sells?

[shmadz]

That's because the "fear" part comes in and they get irrational.

good points in your post furious, but imagine you fall off your surfboard and it bonks you on the head. you're now bleeding from a small cut and you see a shark circling nearby...

sometimes fear can be completely rational. fear can be a completely natural and healthy response. but I hear what you're saying, "fear is the mind killer" is that how it goes? when "rational" fear turns to panic? that's when you are truly without hope.

control your fear and you can control your reality.

[pennytrader]

Bitcoins are valued by the demand side, NOT the supply side.

First time I've ever heard that kind of statement. Price is always determined by both sides. Economy 101...

Of course, the total supply (current & future) is still limited (21m). The ultimate question is whether it can be adopted by the public. I don't have the crystal ball (I believe one noe does) so it's really hard to tell.

No, economy 102 - simple rules dont always work.

There are some scenarios for example where "the profit is made by the purchase department" (getting goods cheap - because the sell price is HARD determined).

Bitcoins: Mining speed is constant. There is little fluctuations there, nothing to invest - people just hoard or spend (little). So, the price is determined by the demand side, as enough people seem to be willing to sell for whatever price people offer. Poor credit card funded miners now making a loss

You need to understand what supply means. If you're hoarding, you're not providing supply but if you decide to sell, then you add to the supply instantly. So the supply & demand are always changing. It's NOT constant.

[grod]

As a thought experiment, consider me starting my own bitcoin chain at a difficulty of 2 million.  The supply is considerably lower than current BTC, but what is be the price?

At some point everything effects everything.  I've always argued the *primary* driver of BTC price is demand, not supply.  For the current market the existing 7 million (and increasing) is arguably sufficient supply.   The supply has not varied very much over the past 6 months.   However, what HAS varied tremendously was demand.