Maybe I am losing market edge by posting this - but I was a lousy day trader anyway so before pulling completely from this market maybe I'll try a non-standard strategy and disclose all of my analysis and discuss the points.
The conference next week can be a big event, I am sure that it will generate a lot of enthusiasm among the participants who will finally not feel so alone and that with all the media attention it can reverse the trend. The risk is that if the price does not go up after the recent drops all the media will take home from the event is that bitcoin bubble continues to deflate.
So it all depends on the next few days - but it does not look too good:
- google trends are down again http://www.google.com/trends?q=bitcoin&ctab=0&geo=all&date=mtd&sort=0
- so is alexa rating of bitcoin.org: http://www.alexa.com/siteinfo/bitcoin.org
- the August stats of new members of this forum are not too optimistic either
- all the recent rallies are consistent with the theory that they are caused by investors who sold higher but kept the money at mtgox (because they could not withdraw it) and that the money in the system does not increase and thus the inflation of new bitcoins being mined constantly takes over
- the big players continue to milk mtgox by building bid walls and tearing them down at the moment they choose and using bots making it much harder for small investors like me
- the stocks collapse causes investors to seek safe heavens not more risky investments
- the poll at the 'technical analysis' thread first time has more 'down' then 'up' votes
- the 'time series' thread predicts lower prices (even if the analysis is just noise this might be self-fulfilling prophecy)
On the other hand the weekend dip is not very probable - because too many people are waiting for one.
In the long term it all depends on bitcoin spreading out of the geek ghetto - if it does the value of bitcoin can go sky-high, but if it falls short term - then there will still be time to buy back the coins and the nearest months look rather dark.
The software is clunky, the exchanges risky, nobody accepts bitcoin payments (as illustrated by the fact that one restaurant accepting bitcoins is discussion subject at this global forum) and bitcoin attracts all kind of crooks who predate on normal bitcoin users. Maybe exchanges have some chances to improve in the next months, against the current standard this is not too hard (just make a backup of your wallet.dat), but exchanges are the easy part - they already make money.
There are other problems:
- the bitcoin system is using a lot of resources to run, just the electricity bill is about $500K per month by some estimates, this is very much for any startup and it probably needs to grow together with the value stored in bitcoins - how many transactions would need to be done in bitcoins to make the system as a whole profitable?
- waiting an hour for confirmations makes bitcoin unsuitable for non-online commerce (and most importantly for mobile-commerce)